THE MOST EFFECTIVE WAY TO ELIMINATE DEBT
Welcome to professrsavings.com, we teach finance basics. Today we will teach you about the most effective way to eliminate debt.
Hi I’m Rayfil Wong. We hope these investment concepts will help you be a better investor.
Debt is the amount of money owed to businesses or financial institutions through the use of credit or loans.
Debt can be made up of many different types of borrowing such as student loans, credit cards, auto loans and mortgage debt even interest free lines of credit when they have a balance are considered part of your overall debt.
The two steps in eliminating debt are paying off your existing debt and avoiding the creation of new debt.
To pay off debt, you must adjust your current spending so that you’re putting more of your income towards paying down the balances of your various debts.
Even the tightest budgets have room for adjustment. In order to free up more money for debt repayment, you can cut discretionary spending, reduce dependence on expensive convenient food items.
To avoid the creation of new debt, it’s important to learn how to live within a budget.
Another hint, don’t apply for additional lines of credit and try to boost emergency savings so there is less reliance on credit cards or loans in an emergency.
While avoiding the addition of new debt means limiting credit use, it does not mean all credit accounts should be closed.
Having a long history of good credit positively affects your credit score. Your credit score can be negatively impacted when certain accounts are closed.