Simple suggestions for the Families to Reduce their Debts
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In our earlier articles we had explained the evils effects of debts in destroying the fruits of frugal living by those who have fallen into the the ‘Debt Slavery‘ voluntarily. We emphasize the word ‘VOLUNTARY’ because of the fact only people who have fallen into them not out of psychological or psychiatric problems, can make a conscious efforts to come out of it
Though borrowing more money to pay off one’s debts is a slippery slope and we advise you not to choose that option if other alternatives are available, yet this may be resorted to if one needs to check that his/her existing borrowing is from the best deals one can get which gives the advantage of a lesser interest, it can be opted with care if that helps one to come out of debts faster.
Please keep in mind that this article does not suggest preferences between one loan and another and one should consider these alternatives only from the point of view of ‘getting out of debts’ and not falling further into debt traps by a ‘chain borrowing’.
Credit cards:
If you’ve been borrowing on credit cards or store cards, you can cut back on your monthly interest by transferring the balance to a card with lower interest rates. If you can find a credit card with a deal such as 0% interest for the first few months then it might be worth transferring your balance for the interest-free period to give yourself an interest payment break. Meanwhile you can concentrate on slowly repaying the actual balance.
Personal Loans
Because of their non-productive purposes, a Personal Loan should not be incurred under ordinary circumstances. They can be resorted to as an alternative to Credit Card Loans’ as A personal loan is usually the next cheaper way to borrow money; but remember that you have to make regular repayments over a fixed amount of time.
Mortgage Loans
Consider the Length of your Mortgage Loans. How long have you had your mortgage? If the fixed-rate or introductory period has expired, the chances are you’re shelling out far more than you need to. As mortgage payments are likely to be your single biggest expense, it’s definitely worth keeping on top of it.
Before you try to re-mortgage it’s a good idea to contact your existing lender to make them aware of the fact you’re considering making a switch. They might even offer you cheaper rates there and then if you’re lucky, but most importantly, check whether you will be charged an exit fee if you move your mortgage.
It’s then a case of tracking down the cheapest deal you can get. Remember to take into account any exit fees from your old lender, and entry fees for your new lender, to get the true amount you will pay or save by switching.
It may seem tempting to get a bigger mortgage, and use some of the cash to pay of your existing debts. Beware, though - this is not a decision to be taken likely and should only be carried out if it’s ultimately going to save you money. Remember that adding all your unsecured debts (credit cards/loans etc) to your mortgage increases the risk of losing your home because of the amount your loan increases by. informed decision.
Increase your income
Of course this may sound easy but this is the most difficult one when coming to implementing;but there is not escape from it. There are a million things one can do on top of one’s full-time job which can help boost the household income, and most of them are really enjoyable too. Think about what skills you have, or something you enjoy doing – then think about how you can turn it into a money making opportunity.
If your household earns under a certain amount you may be entitled to benefits or tax credits – particularly if you have children. Even if you don’t think you’re eligible it’s worth taking a look on the government.
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- How to Calculate the Refinancing of Your Mortgage
- Handling the Most Important Debts
- How to Assess good debt from Bad Debt
- How to Shop for a Mortgage and get Pre-Qualified
- Introduction to Credit Card Debt
