Debt or loan: How you can get rid of from such an obligation soon?

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Debt or loan: How you can get rid of from such an obligation soon?
With consumerism activities on the upsurge and financial institutions easily financing such activities, consumers are left with huge debt obligation. The debt or the amount owed to another party hinders financial freedom of the concerned and it becomes imperative to first get rid off it before pursuing any other financial goal.

Why paying off debt becomes so difficult?

Debt or the loan obligation becomes all the more cumbersome to discharge on account of the interest payment added to the principal amount. Had it been just the principal amount, borrowers may be in a much better position to service it. But the hefty interest obligation turns out to be a bane. Small loan amount doubles or trebles or even increases more than that when computing the total cost of borrowing depending on the cost or interest rate charges.

What recourse a borrower has to get debt-free in less time?

Service debt payments in a higher quantum than what is actually due:

Though with limited financial resources in hand, loan borrower at most is able to discharge the minimum obligation due in a particular month. But it always makes sense to pay more than the minimum amount as then the interest amount as well as the repayment tenure for the loan gets reduced. And, after disposing such a liability at the earliest, you can then deploy your disposable income towards rewarding investment options for meeting your long-term financial goals.

Try to increase your income source :

To supplement your monthly income explore ways depending on your skill sets and other constraints to augment your cash inflow. The extra cash thus generated can be put for servicing the debt and hence the obligation can be discharged rather easily and at a faster rate.

Cut down on your expenses:

If not for the entire life term resort to careful spending during the period for which you are under debt. Splurging on unnecessary wants should also be avoided as that money can be used for putting off debt at the first place. Avoid going for a retail therapy when you feel low instead you can opt for other better vitalizing ways that require no monetary engagements on your part.

So, a little change in attitude, mindset together with persistence and determination you can definitely get rid of the debt or loan obligation easily without hurting your other financial responsibilities and goals.

Read more about: loan, debt, interest, principal
Story first published: Thursday, January 23, 2014, 13:54 [IST]
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