Tuesday, March 11, 2014

How to escape from debt trap?


Debt Trap
We know that we could use a good debt to get rich but it is absolutely necessary to escape from bad debts! But most of us don’t know how to avoid succumb to debt in general? There are few tips to consider and I am detailing here follows. Strip wasteful spending budget and unnecessary expenditure budget. Debts are not always caused by uncontrolled spending.

Most of the time, they are the result of high costs. Debt is not spending a lot, but if the little expenses that occupy too much space in our budget then that will create a problem to your daily life. Analyzing your account will show fixed expenses such as rent of our accommodation, car insurance, home insurance, a mobile package, consumer utilization like power, water etc. For these expenses, our ability to reduce it remains limited but we must make the most of the money spent. We must try to get the best price or the quality and for that you need to run the competition.

Car insurance will be reviewable for example; a mobile package which cost us 50 USD each month will fall to 10 USD from the competitor if you are migrating to the better network. It can also lower a monthly borrowing or by renegotiating a new loan for example rate of 3.0%, to redeem the old rate was 4.75%. Thus, everything can be verified and judged. Thanks to the internet, all the information is accessible for all market players with details of the offer price, customer feedback on the service. This is the first step; that will reduce costs "fixed" in trying to get the most out of them.

Then, the variable costs come into play and there it is anyone's choice. Try to live more simply, do not clutter of objects that have the same function and that ultimately does not work after a few months. Prefer quality to quantity as feedstock. Keep only what brings you value, sell the rest, it will be a new contribution to your fund precautionary or your other investments. Some will be more extravagant than others but as mentioned above should seek the best quality / price ratio that is for fixed expenses services and for your variable expenses like food, cooking, dressing, equipment, appliances, high-tech.

Diversify and expand your sources of income: Debts lead us into a downward spiral, as they cause expenditures premiums and other interests. To head out of the water, it must cut expenses as above and / or increase revenues. This mean being more focused on your career in order to obtain a better paying job. We can also look for secondary sources of income, for example by developing your own business, selling skills (taking language classes, guitar, gardening, hairdressing, IT freelance, freelance financial missions) on sites.

There are many possibilities; you just open your eyes to the opportunities there to withdraw money. Credits are often a substitute for savings. Some live very well the fact of having no savings because they need something, if there is an emergency, it is possible to borrow ... This trend is based on credit is dangerous. It must be reversed and economies must become a priority. Initially you will not generate income but once a savings of security you will be made more serene.

Calculate your fixed costs and average variable costs, so you know how much you need each month. From there, you see if making some efforts without costing you in their quality of life, you could put 100, 500 or 1000 Euros every month aside. In the end the debt may become a distant memory, it should be organized in such expenses in obtaining and investment income.

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