Today inflation has increased a lot. Buying your own house or daughter’s marriage and children’s education are among the most expensive deals, on which a lot of money is spent. Sometimes you may have to take a loan for these works. But when the burden of debt increases, it does not take long for the financial condition to deteriorate. Many times due to not managing the loan properly, you get trapped in the debt trap, and sometimes it also happens that despite full proof financial planning, you are unable to stop yourself from getting trapped in it. In such a situation, some special tips (Useful Financial Tips) can help in making your problem easier…
By taking a loan, you can buy a house or a car. Not only this, by taking a loan, you can fulfill your financial goals like children’s education and marriage. However, this is not a good thing for your financial health. When the burden of debt increases, then it becomes very difficult to get out of it, but even after this, if you try to get out of it with the right strategy, then you can get free from the debt trap.
Take loan as much as you need
Be it a bank or a credit card, taking a loan from anywhere is expensive. So while taking a loan, keep it in mind that you have to repay more than double the amount of the loan taken. So, take a loan only as much as you need. If you are already burdened with debt, then you should avoid taking another loan. Ideally, all your EMIs and credit card bills should not exceed 40-50 percent of your total income. Before this, do assess your capacity and expenses. When you repay this loan, then only think about another loan.
First tip: To find any solution to become debt free, first make a list of all the loans you have. Write down the loan, its EMI and its interest rate along with the duration. This will help you identify the urgent and most expensive loans.
Second tip: After reviewing the entire loan, you understand which loan is the most expensive and which is the cheapest. But you should first focus on repaying the most expensive loan. Because paying the higher interest applicable on it affects your finances. For example, you pay around 6.6-9 percent interest on a home loan, 10-16 percent interest on a personal loan. Credit card loan is quite expensive. In such a situation, you can close the loan with higher interest by taking a top up on the cheapest loan.
Third tip: The method of refinancing can also be useful. You can try to convert expensive loans into loans with cheaper rates. Keep in mind here that personal finance loans are long term and have low EMIs, while credit card loans are short term and have large EMIs. For this, you can convert all your credit card loans into personal loans, or you can reduce the large loan with the help of gold loan or low interest rate loan.
Fourth tip: If you have some asset that can be liquidated, then do not hesitate in doing this. You can use this amount to repay the loan. Apart from this, if you restructure your budget and remove unnecessary expenses from it, then you can use that amount for pre-payment (Loan Pre-Payment). With pre-payment, you can reduce your loan burden considerably.
Fifth tip: If you have not received a good increment for a long time, then you can consider changing your job so that your salary can be increased and the loan burden can be reduced by using the increased portion. Apart from this, you can think of increasing your income by starting some kind of part-time business. This will help you get out of the debt trap soon.
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