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Thursday, September 17, 2009

Becoming Debt Free

Debt by definition means liability, money owing, an obligation, compulsion, or requirement to pay someone back for either borrowed money or product purchased on credit with the aim to settle in installments over a certain period of time. Every debt comes with its own problems, depending on the amount in question and the level of interest charged. Don’t be fooled by the so called “Interest Free” purchases if you pay within 3 or 6 months. There’s no debt that is interest free. To be Debt Free, take the following actions amongst others:

- Analyse your needs and check as to which expenses are taking more of your money per month. Once you’ve identified the pattern of your spending, move to action 2 below
- Change your spending habits (e.g. target and payoff all high debts first)
- Get rid of or reduce all controllable expenses such as entertainment, high telephone bills, travelling, festivity, Clothing Accounts, DSTV, Internet, etc. this means you should discern between luxury and necessity)
- Cut down the number of credit cards
- Start paying your bills on time (to avoid agency or lawyer collections)
- Reduce your credit limit on all your accounts (Ask your creditors to give you the minimum credit available to you)
- Borrow interest free money from sources such as friends or family (NB: Return what you borrow! Remember it’s interest FREE, and its to your benefit )
- Audit your credit records to ensure that there’re no errors (dispute all inaccurate information)
- Use Cash instead of Plastic
- Save the additional money left, you may need it some day

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