Friday, January 31, 2014

Getting Out Of Debt In Five Steps

Are you currently getting out of debt the best way you can? While you may have all the reason to be disheartened, do not be. This may seem like a mission impossible. But the truth of the matter is, this mission is workable. There are at least five steps or ways by which this can be done. They are listed below. 

File bankruptcy – This is the easiest way to get rid of your financial liabilities. Most entrepreneurs who are depressed and overwhelmed by the sudden turnout of events in their businesses file bankruptcy to avoid lawsuits from their companies and individuals to whom they owe money. However, you need to check out related laws on this. Authorities would conduct their own investigations before granting any opportunity on getting out of debt.

Borrow money from a family member or relative – Oftentimes, loved ones are great sources of loanable money without interest. This is better than borrowing money from firms. Interest rates can create new debts on your part. Even though you are borrowing money from a relative, it is best to put into writing the terms of agreement you and your loved one will reach. Be ready for possibilities of misunderstandings too. For one, another family member or relative might question your ability to pay on the agreed deadline.

Increase your income – Look for additional job opportunities other than your current business or work. More than one source of income means increased ability to cover your financial liabilities. Also, consult a tax accountant. This professional has the ability to check out and add other legal deductions from your taxable income. The extra dollars you can save from this would be helpful enough to cover a portion of your debts.

Sell your possessions – Do you have anything valuable inside your house? Have a clean-up drive during the weekends. Check out pieces of furniture, jewelry or branded bags and clothing which are equivalent to a substantial amount of money. If you have not used them in a year’s time or if you do not see yourself using them in the near future, it is best to part ways from your possessions for a better cause.  This can be very painful but just think of the huge percentage of debt that would be out of your head. Another variation of selling that you can try is trading off. Perhaps, you own a top of the line car. You can trade it off for a cheaper model. You can surely get a sum of money from such a trade-off.  

Stop increasing your debt – One example of this is using credit card to buy new appliances, gadgets, clothes or surplus of food which you may not need at the moment. If you are serious about getting out of debt the soonest possible time, stop using your credit card and start using cash for your purchases. This will force you to buy only what you need and save enough money to cover pay off all your liabilities.

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