Monday, June 10, 2013

Turning debts to riches - Is it possible?

Your debts can be a headache to you. Thus, it is very important to get rid of them and turn them into riches. You may be surprised to know that it is possible to turn your debts to riches. But you will have to be patient enough in order to do so. You will not be able to turn your debts into riches in a day or two. It is very important to understand the fact that only debt elimination can lead to financial security.  
It must be definitely your dream to own everything in your life – your dream home, a big car, furniture, etc. It will also feel great if you won’t have to fret over your credit card bills, loans and mortgage payments, isn’t it? Though it sounds like a dream, it is possible to achieve this dream only if you patiently try to achieve it.

Paying off high interest debts

The first step to turn your debts to riches is to save money. Once you have an emergency fund which can sustain you for 8-9 months, then you can concentrate on paying off your debts. You should try to pay off your high interest debts first. Once you pay off your high interest credit card debts, pay day loans, other unsecured loans, etc. it will help you free up quite a lot of money.

Turning debts to riches - Is it possible?

Paying off secured loans

Once you free up your money, you can concentrate on paying off your mortgage fast. You can do this by paying extra amount toward your loan payments. This extra amount can help you reduce your principal balance and thus make it easier to pay off your loan faster. However, while you pay off your secured loan like a mortgage or car loan, you should check out whether or not there is any pre-payment penalty clause mentioned in your loan agreement. If yes, then you should read through the clause and make sure that you don’t become liable for paying the penalty charges.

Is it really possible to turn debts into riches?

Better said than done! Yes, though it sounds easy, it will take few years to achieve your dream of becoming debt free and increase your wealth. Thus, your patience will be at test. These few years of your life will be a bit difficult. But if you can bear it, you will become debt free. In case you cannot manage all these on your own, you can take help of a financial planner or a credit counselling agency and they will help you better in this regard. Once you become debt free, it will be easier for you to invest in your retirement account. Thus, you will be able to safeguard the golden years of your life. At, the time of retirement, you will not be dependent on anyone else. Rather, you will be in a position to support your children.

Hopefully, now you have understood the fact that it is possible to turn your debts into riches. It is expected that now you will feel encouraged enough to take steps in order to become debt free.

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