Golden Debt Reducing Strategies

Debt has become significant part of modern life style. People with high aspirations and desire of having and achieving many goals and leading a qualitative life guided by branded Phones, Gadgets, Electronic Items, Luxury trips to purchasing of essential needs like House and Car people tends to take loans to achieve all of this. Easy EMI Options coupled with low interest rates and easy documentation has contributed a lot in credit growth of the banks.

However emotional buying and having debt above the paying capacity many times became problem for its availer and he or she may find himself or herself under debt trap which can cause very bad effect on health and wealth.

Here we will share with you some strategies to reduce or either say manage your debt more effectively so that you can achieve your goals vis a vis you also can check your finances well.

 

• Priorities your loan on the basis of Interest rate: -

List down your loans on the basis of Interest rates and pay the loan with higher interest rate earlier by paying some extra EMI so that because of compounding effect of the loans its repayment period shall be reduced.

For example, suppose you have availed Rs 25,00,000/- loan for 25 years and its EMI comes to Rs 17,272/- per month than just by paying one extra EMI per year you can reduce the repayment period of 25 Years to 20 years and 9 months with saving of Rs 517,295/- of Interest amount.

• Restructure your loans: -

All those cash credit loans which are becoming very difficult for repayment as both Interest and principal are not getting served can be converted into EMI based loans which will make it easier for payment.

• Pay unsecured loans availed from relatives and friends by availing secured and unsecured bank loans: -

Unsecured loans from relatives can be paid off by availing secured loans or unsecured loans from Banks as bank charge less rate of Interest compared to relatives and freinds moreover both interest and principal can be served monthly in the form of EMI thus there will be less burden to repay money to relatives in one or two installments. Most importantly one can keep its financial position secrete from relatives.

• Evaluate your expense: -

Try to evaluate your expense, categories them and analyze them to find out where you are spending more and then decide where you can scissor your expenses to reduce them so that money saved can be used for payment of debt. Budgeting can also help in fixing your expenses.

• Pay loans with other income

Whenever you generate any extra cash or windfall gain from any source for example you got 10,000/- as gift than don’t use it against expenses and pay it directly to set off your loans.