Managing your finances to close the doors on debt – Some tips

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Are you on the threshold of filing bankruptcy? Recent reports reveal that an increasingly large number of people are treading on the path of being a bankrupt and 2012 is perhaps going to see double the number of bankrupts that they saw in 2011. Bankruptcy is not only harmful for the debtor but it is equally treacherous for the creditors as they keep on losing the amount of money that they’ve lent to people. This can be easily be avoided by managing your personal finances so that you can repay your debts and stay debt free. Though you can consolidate debt as this is a debt relief option that can be taken resort by the debtors in order to become debt free, yet managing your money and staying safe is always appreciated. Here are some ways in which you can do so.

1. Make a list of your debt obligations: The first step without which you can’t go onto the next steps is to make a list of the total debt obligations that you owe. Take a pen and paper and jot down all the debts that you owe your creditors with the principal amount, the interest rates and the due dates. Unless you’re sure about the amount, it is almost impossible to take any further step about personal finance management.

2. Formulate a budget: If you want to stay on top of your finances, you have to make sure that you formulate a frugal budget that eliminates all the unnecessary expenses. You have to earn your dollars and therefore if you end up wasting them, it is sheer foolishness. Stay within your budget and don’t cross your spending limit as this may directly lead to debt. Make your budget and evaluate it at the end of the month so that you can keep space for improvements.

3. Save enough funds: The financial experts are of the opinion that one must save at least 10% of what he makes in a month so that he can build an emergency fund that can be resorted to during an emergency. Irrespective of your gross monthly income, you should save a small portion of it and then take help of it when you desperately need money. However, make sure you don’t use the emergency fund like an ATM card, withdrawing money whenever you want as this will nullify all the benefits.

4. Cut your credit cards into halves: The next step that you have to take is to cut your credit cards into two halves so that you can resist to the temptation of using them while purchasing things. Carry cash instead of credit so that you don’t owe money for a thing that you can’t afford with cash.

Therefore, if you’re interested in controlling your spurring debt obligations, you have to make sure you take the correct personal finance decisions. Money is everything and if you don’t take care of your funds, you can soon land up in high interest debt for which you may have to consolidate debt from a professional company.

About the Author: Ryan is a contributory writer associated with the Debt Consolidation Care Community and has written several articles for various financial websites. He holds his expertise in the Debt industry and has made significant contribution through his various articles.

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