With the Mayan proverb, that the world will get destroyed on 21st December, 2012, proving to be wrong, we are now welcoming a new year with all happiness. In order to make 2013 a prosperous year and avoid further debt problems, you should take some positive financial steps. In the long run, these positive steps will help you in balancing your financial life and you will be able to avoid tension.
Check out some of the tips to balance your financial life:
Limit your student loan debt:
It isn’t a good option to start off your professional life with a six figure student loan debt. Thus, it is better to limit your student debt so that it is somewhere near to the take-home salary in your chosen career. Student loans are such a debt which you will have to pay no matter what and you can’t even get them discharged in your bankruptcy filing.
Plan before you spend money:
If you have a proper spending plan, you will be able to control how much you can spend and on what. Ending up following some other person’s plan won’t be a good option. If you plan before you spend, you will be able to save money and have a safe financial life.
Emergency savings:
You can’t predict life and the surprises it has in store for you. In such a situation, to avoid being in a tough spot, it will be better if you could save money for emergency situations. It will be better if you could save six to 12 months' worth of living expenses. This should include the amount that you normally spend each month.
Don’t cosign for any loan:
Cosigning for any kind of loan may lead to messing up of your finances. If you co-sign for some other person’s loan and if that person fails to pay the loan, then it will have a negative impact on your scores and you will become liable for paying off the loan. Know more.
Think before you consolidate your debts:
Many people think that consolidation of debts into one single payment at lower rate and terms will be a good financial strategy. However, that is not the case always. Many people add to their debt burden even after consolidating their debts. Thus, they end up taking further debt. So, it is always better to restructure your spending than your debt.
Say no to payday loans:
Taking out a payday loan will make you liable for paying a large fee. Also, you will have to promise that you will be paying off the loan when you are next paid. But is there any guarantee that you will get more money at your next payday? NO. Thus, this will lead to a viscous circle or debts and fees. So, take steps to avoid payday loans at any cost.
Pay off no-interest offers ASAP:
You may have taken out a no-interest debt which gives 48 months time to pay it off. It also means that you have 48 chances to mess up everything. If you make one late payment, it may lead to high interest payments will make things difficult for you.
Avoid upside-down car loans:
You should note that vehicles can depreciate in value faster. Thus, when you want to sell off your car, you will have to make enough sale proceeds so that you can pay down the car loan in full. This can be difficult. In order to avoid this, you should make a large down payment which will give you the freedom to sell off the car whenever you wish.
Never ignore your debts:
Ignoring a problem won’t help you to get rid of it. If you do so, you may incur high interest rates, large fees and a summons to appear in court. It may also lead to years of bad credit and also wage garnishment. So take steps to get rid of it and not avoid it.
Bankruptcy – Your last option:
There are various ways in which you can get rid of your debt problems. Thus, filing bankruptcy should be your last option. This is because bankruptcy filing will ruin your credit as well as your job prospects.