Today’s generation wants the latest releases – be it a car, phone or laptop – but don’t have the patience to save up and make the purchase. They have an attitude of spend first, think later and the ubiquity of credit cards and EMI in today’s world only makes it easier for them to go through with such plans. This kind of a lifestyle can see you incurring high credit card bills, paying expensive EMIs and at the same time deter your savings and derail your finances. In this article we’re going to look at a few ways for you to steer clear of falling into such debt traps and efficiently reduce and debt burden you may presently be facing. 

1. Clearing your current debts:

List down all your outstanding debts and make payments towards them as soon as you get your salary; don’t put them off for the end of the month, as you may be short on funds by then. Start by clearing the high interest debts like credit card payments and personal loans first. If you have taken out an education / student loan for your higher studies, you may want to work out a plan to go about paying it off as soon as possible. Should these go unchecked they may mount overtime and become too overwhelming to resolve. In this regard, you may want to work with a financial advisor to identify an optimal strategy towards clearing your debts. 

2. Keep away from credit:

Having started clearing your outstanding dues, you don’t want to be creating new ones. Limit the use of your credit card as far as possible. While it can be hard to resist the use of credit cards when you are strapped for funds, failing to pay off your bill within 45 days can lead to exorbitant interest rates – as high as 36% per annum. Swiping your card may get you what you want in the moment, but it will only make the situation worse in the long term.

3. Reduce and budget your expenses:

You don’t need to have a subscription to every streaming service, and go out and spend lavishly on all weekends. Reduce your expenditure on non-essentials by cutting down on expensive things like eating out often and spending on unnecessary entertainment. While a home cooked meal may not be as fancy as going to a nice restaurant, it’ll definitely be better for your wallet. Another important point to note is to budget your expenses. This way, you keep allocate some portion towards having fun and at the same time draw appropriate limits to your spending. 

4. Take up a part time job:

If you have some extra time on your hands, you can consider taking up a part time job. There are many opportunities you can avail of online and work from the comfort of your own home. The money from your second job can also be extremely helpful towards making EMI payments for your outstanding debts, and allowing you more leeway in terms of your spending. 

5. Save and invest towards your goals:

Don’t be tempted by sales, discount offers and zero interest EMIs; these are all just myths and will get you to spend on things you can’t really afford. So if you want that new laptop, phone or smart TV, always try to save up for it. Especially when it comes to making larger purchases like a car or a house, it is always better to invest towards accumulating the capital you need to make these goals a reality. Consult an experienced financial advisor who can assist you in finding the right instruments to put your money in, to make these goals a reality.

These are a few tips that can go a long way when it comes to cutting down on the burden of debt. When it comes to spending your money, always make an informed decision and never give into the heat of the moment.