Don’t you feel the caption looks a bit confusing? Yes, the concept of getting rid of the debt is simple, but people are making it more confusing. Too many calculations are making it a wider issue than it is. What will you do if you are in debt of $ 500 on your credit card and at the beginning of the month you have that amount in your account? Commonly, people would repay the debt and keep themselves from debt. Yes, you keep yourself away from debt, but how long? The very next day, you need to repair your car, and you would choose to spend it from your credit card. So you are in debt again.
Repaying debt aggressively doesn’t work
The aggressive term refers to the entire payment that you are making to your credit card to ensure that the debt is wiped off. Let’s take an example to explain the way to get out and stay out of debt in a much more vivid way. You are on a boat and you are in the middle of a river. Suddenly, you find the boat has a hole and the water is pouring in. Jumping out of the boat can be a solution. But you are in the middle of a river, and you are not at all bothered by it. What if you are trying to block the hole? That would definitely save all of you without any further concerns.
Similarly, if you are in debt, then ensure to be safe first and then try to close the entire debt.
Possible debt prevention technique
Let’s discuss the debt prevention technique with an example that would illustrate the explanation simply.
- You have a total amount of $ 500. Your debt amount is also $ 500. It is always advised not to pay the entire amount.
- Rather, what could be the possible extra expenses? Note it down, keep aside $ 50 for Christmas, $ 40 for vet bills, $ 35 for annual car registration, and $ 100 for your car repair. In total, the amount is $ 225, which you keep aside.
- The remaining $ 275 you can use to repay your debt. So for the next month, you are not using your credit card for these expenses.
- Continue to do so, and you will find that not every time your car needs $ 100 for repairs. Yes, there would be a higher cost than $ 100 for your car, but most months would have no expenses for your car repair. So utilize the car repair fund and avoid using credit for that purpose.
- After a few months, you would notice that all your debts are paid off and you have saved a good amount for various causes.
Summary
Clearing off the debt is simple only if you make it look simple. Prevent yourself from debt today with these techniques.
