Living with debt is highly problematic and not advisable, but for a good reason. Having debt even with low interest rates makes everything more expensive, reduces your saving and also makes it difficult for you to grow. To accumulate wealth in the long run, it is necessary that you become debt free.
List your Debts
Before we take a step to repay debts, have a clear idea of what needs to be repaid. Make a list of your debts which would have all the details of the loan taken, repayment date, EMI, Interest rate, etc. Ensure that you have not missed any debt that needs to be repaid.
Also Read: How to Keep a Business Afloat and Manage Debt?
Review your Debt
Taking loans is the easiest way to finance your dreams today. Debts that buy assets which appreciate in value over the cost of debt in time is the ideal loan anyone should take. Debts like student loan, home loan, business loan, etc. gives you the opportunity to grow now by adding value which appreciates in time. So, instead of taking unnecessary debt always prefer to take loans that creates assets and income.
Repay High Interest Debts First
Start by repaying the high interest loans, such as credit cards. Pay the maximum amount you can afford against the high-cost loan without defaulting the repayment of the other loans. Once you have cleared the costly debt, move to the next one. Live frugal, save money, increase your income and pay down all the debts faster.
Dispute Errors and Undue Penalties
As a debtor, you have the right to dispute any information that you might think is inaccurate or not verified. You could contact your creditor to figure out a path to settle any disputes and waive of undue penalties and errors to repay your debt. They may be willing to waive some of the errors and late penalties if they know all their loans will be settled square.
Collect Evidence for Becoming Debt Free
If you are successful in repaying a loan, make sure the creditor gives you a certificate of evidence for settling your debt with them. If you have borrowed from registered financial organizations your credit report will be updated and the agencies will be notified. You will also need to have an updated copy of your credit report that finally says you are debt free.
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