Streamline a Path to Financial Freedom

The answer to obtaining financial freedom isn’t hidden in legislation, or any overhaul of the credit system. Financial freedom has more to do with self-examination, smart budgeting and embracing a financial diet. There are five steps that can drastically reduce a debt load.

1. Map out the Spending – There are three things you need to know; your expenses, income and goals. Where’s the money going? Writing down expenses will provide a snapshot of needs versus wants. Cutting out the wants will mean a lot of tough choices and many justify overspending by writing it off as a need. Sure, you need to eat, but you don’t need prime rib.

2. Streamline Expenses – Frugal is not a bad word. Frugal living can reduce your household expenses by 40 percent, if not more.

a. For example, if you tend to purchase brand named goods at the grocery store, start buying generic and save almost half on your bill.
b. Also, look over your cable bill. Most of us have never watched many of the channels on our cable line up and premium channels have premium charges. Ask your cable provider how to lower your bill, including switching to a lower package, with less channels.

3. Seek Hardship Programs – Inquire about Hardship Programs. Most people are unaware that creditors offer these programs to clients. Creditors would rather resolve payment issues and not incur the added expense of debt collection.

a. Call customer service and explain your financial situation and ask about any hardship programs they can offer. Typically, creditors will modify a payment plan that includes a reduced interest rate or deferment.

4. Student Loans – Students today are so deeply into debt that minimum payments are a shot in the dark. There are a few remedies.

a. Ask the lender to restructure the loan. Every lender has flexible payment options, including lengthening the life of the loan. Of course, remedies will always mean more interest payments, yet this can still be a good strategy for the present.
b. Students with several loans and various interest rates, all from different lenders can take advantage of a consolidation loan. Shop around and look for the lowest rate possible. The advantage here is that students get to make one loan payment and lock in an interest rate.
c. Deferment or Forbearance – Students can ask to postpone or defer payments until their financial situation improves. Lenders can also approve a full or partial forbearance. You simply apply and explain the honest reason you cannot make payments on the student loan.

5. Credit Cards – Do not borrow money that you cannot pay back. Credit cards have no place in the world of financial freedom because banks have created an unfair advantage. There are no low-interest rate credit cards, only good marketing hype.

a. When dealing with credit card debt, pay more than the minimum on the cards with the highest interest rates.
b. Look for better rates. Anyone can transfer their credit card balance to a new card with a better interest rate and then practice prevention and live on a cash basis.

Capitalism encourages the consumer to spend more and save less, but we need to revisit our priorities. There is one major change that can immediately impact debt – reduce your spending. When you let go of the obsession of buying “things,” the despair fades away, the anxiety and stress disappears and you learn to handle money responsibly.

Author Bio:

Jason Miner plays a vital role for www.blogcarnival.com.  He is an expert in writing topics of different categories.  He is helping the carnival team to grow & working on making this an even better place for bloggers.

Related articles

• Five Ways to Eliminate Student Debt (savealittlemoney.com)
• How to Balance Between Your Income and Expenditures? (50plusfinance.com)
• Student Loans Within a Marriage Can Complicate Finances (whatisa529plan.com)

Tags: Credit card, Debt, Debt consolidation, Expense, Interest rate, Loan, Payment, Student loan

Category: Family Finances