5 ways to stay away from redundent debt!

Often one thinks that debt in itself is not a good to have in one's life. But I would like you to think a little differently. Try to see it this way. Some debts add value to your life while some do not. Always think twice and proceed before committing yourself to another hole in your pocket on a monthly basis.

Below are 5 ways to stay away from debt or "Debt consolidation care"

• Planning:

There should be a solid plan and reserve cash worth to survive for at-least next six months with you. Make sure you follow this as rule of thumb so that this sum can also be used any other emergencies as well. It also relieves you from have constant thoughts running to arrange for funds when in (very bad) need.

Do not take any earnings that are not realized for your planning. Always plan with what you have in your hand at the current moment. An unrealized but already planned amount might through into a risky situation anytime.

• Keep luxury expenses at bay

Are you really in need of that asset that you are about to purchase? Ask yourself this question three times before making a purchase. This method has seen decisive results where people have made a wiser choice instead of spending there valuable hard earned money on a unreasonable luxury which is not required at that moment in their life. Control your urge to but the expensive gadget for 10 seconds and you are good to go. ;)

• Thoughtful investments

Always invest in commodities or products that would give you good returns in short term as well as long term. Assess the product which you are investing in and take decision. Investing would help you at times of real money needs in future. It is suggested that ULIP policies and mutual funds are great for investing given that the risk factor is safely balanced. Try to directly invest in stock market through broker, use third party means like the Mutual funds and the ULIP policies to have your money into various verticals so that when there is a worst financial crisis your money in still safe.

• When you really want the additional money. What to do?

First look at your priorities in using the emergency fund that you have hopefully saved for yourself. If things look green for near future and you do not require to use the fund for any other purpose, then take the help of this cash to overcome the requirement that you are facing. If you do not have emergency fund saved for yourself or if you cannot use the fund for various reasons, research the market for the lowest interest finance product. Gold loans are the most cheapest and less additional burden followed by a personal loan (though I would discourage going for a personal loan, go for a lowest tenure max EMI plan so that you are paying less interest).

• Strategic Debt or Debt Management Plans

What is this strategic debt? Sound ridiculous? Well, this only means that you need to have controlled money borrowing plan as against going haywire borrowing money from all possible sources just to make sure your are fulfilling the immediate financial requirements of yours. Never commit yourself for more than 15-18% of debt out of your total income. That would mean that your have enough breathing space for other stuff in life. Also set a rule for yourself when it comes to taking a cash assistance that you would not borrow more than once at a time ensuring you do not have multiple EMIs running.

Hopefully you have enjoyed this article and would apply some best practices in handling your existing debt and staying away from the upcoming debt monster! :)