Financial guidelines to help you reduce your debts in 2015

Here’s a simple guide to help you become debt-free.

14:56 05 January 2015

It is normal to find people being overwhelmed by debts. These days, people borrow more money than they can afford to pay in order to chase a lifestyle they don’t want. As the countdown to the New Year begins, we can think about reducing our debts and try to do simple things to reduce our financial burden. However, all of us need to be realistic, monitor their finances and act accordingly on the findings.

By adhering to the guide below, you can take that first step towards being debt free.

1)    Record and evaluate your spending

If one does not keep track of spending, then it becomes difficult to identify when and where changes are necessary. Keep all your purchase receipts and analyse your spending every month. After the evaluation, one can establish the expenses that should be reduced.

2)    Make a spending plan

A reasonable spending plan can help a debtor to settle debts and stay away from them. The plan should only include expenses for needs and necessities. Knowing the most important expenses allows one to stay away from piling up debts.

3)    Avoid credit cards

Despite the large credit card limits that a person can enjoy, it is better to use the plastic for emergencies only.

4)    Focus on debts

By making debts a priority, debtors can identify the debts that should be settled first. It is advisable to settle debts that accumulate higher interests than those with lower rates.

5)    Own a savings account

Debtors can find extra cash for emergencies through saving. That will save you from more debts.

6)    Be part of credit counseling

Credit counseling is the most effective way of knowing how to evade debt. This form of education can enable debtors become better financial managers who can make reasonable budgets.