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Easy Debt Management Tips to Financial Security

Debt is no longer a bad word. If used judiciously, it can bring huge benefits to our lives. Yet, it also holds immense destructive power.

It's exactly like fire. When in control, fire is good. Wild fire, on the contrary, can be catastrophic.

Therefore, like fire, controlling your debt is absolutely essential.

Thankfully, this requires nothing more than simple common sense.

So, here are many "quick and easy" ways to come out of (and keep away from) financial mess and misery.

1. No New Debt, Please.

This, naturally, is the most obvious (and first) step to take. You simply can't come out of debt, if you keep borrowing more money.

Therefore, you have to take a firm pledge — 'No More Loans'; until your existing debts are brought within complete control of your repaying capacity.

2. Keep away from credit card, Please.

I know it is "psychologically" not easy to forgo a good deal, even when you know that it is not a necessity. Therefore, the only way to cut out impulse purchases, is to cut out the purchasing power.

This can be achieved by carrying only a limited amount cash in your purse; and leaving your credit card at home under lock and key.


Even small (unnecessary) purchases, can quickly balloon into a massive (unnecessary) bill.

Debt can be as Useful and as Destructive as Fire. Manage or Perish.

3. It's time for a Budget, Please.

As I have often mentioned, don't be put off by the word "budget". Budget is not meant to ‘tie’ you down.

On the contrary, it is like flying a kite. The purpose of the kite-string is not to prevent the kite from flying. In fact, without the string the kite cannot fly far; or fly high; or fly for too long. The string enables the kite to fly with direction and within reasonable limits.

Budget provides proper financial perspective by giving a clarity on your expenses. This is a vital input in any debt reduction plan. In other words, budget is means to economic freedom; it is not a financial restriction.

4. Consolidate Existing Debt, Please.

On the face of, this may not sound as a big deal. However, this SMALL change (in your debt profile) has the potential to bring about HUGE change (in debt management).

Lesser number of loans to service; lesser interest outgo; lesser time pressure; lesser harassment are some the many advantages of Debt Consolidation.

All you have to do, is to combine your many "high-interest, short-tenure" loans (such as credit cards, personal loans) into a few "low-interest, long-tenure" ones (such as loan against insurance policy / shares / mutual funds / gold or top-up on your home loan).

Here's my detailed write-up Think debt consolidation when drowning in debt.

5. Talk to your lenders, Please.

Instead of hiding, be upfront with your lenders about your financial distress and difficulties. They don't like defaults or nasty surprises.

Rather, they would be quite willing to work out 'mutually beneficial' solutions... such as moratorium on repayment, extending the loan tenure, converting credit card outstanding into EMIs and (even) reduction in interest rates.

They are partners in your financial progress, not an adversary.

6. Back to Basics, Please.

High-end phones, designer dresses, luxury cars, premium homes and lavish parties etc. are often just a means to show-off; gobbling up lots of cash in the process.

Don't be a snob:

Stick to utility products. This would not only serve your purpose, but also save precious money, enabling faster repayment of debt.

I guess it is infinitely better to sleep peacefully, than to score a few (pointless) points over your peers and neighbours.

Are you aware of the Five Ratios To Evaluate Your Financial Health?

7. Add multiple income streams, Please.

So far, we have considered only the "reduction in expenses" side of the story.

However, there are numerous opportunities to "enhance your income" too. Giving tuition, selling insurance, preparing home-cooked food for students are some of the old-economy part-time money-making ideas. Internet is the new-economy tool to bring in additional cash into your pockets.

So, don't hesitate to add some 'extra' income in your 'extra' time.

This, by no means, is an exhaustive list. You are resourceful enough to add many more ways to it.

Remember : We "owe" a financially stress-free life... to our family and ourselves.

Meanwhile, discover How To Reduce Your Home Loan EMI.

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