Auther Created By:
Amy Nickson On 29th Aug,17
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Debt yoke: How not to be your creditors' slave?
It is best not to accumulate debt at all, because, it's easy to be in debt, but difficult to get rid of it.

One staple debt that is obvious in your life is student loan debt.

Due to the sky-high cost of the higher education, most of the students are accumulating student loan debt in our nation.

This debt is becoming a serious financial issue for the students as unemployment and low wages are the main reasons for earning no or less money.

Thus, most of the students are not able to pay off their student loan.

Therefore, they are becoming the slave of the lenders from the very beginning of their career.

Due to the unemployment, young adults are living with their parents.

Because,the major part of their income goes toward the debt payments.

Thus, they are unable to focus on other financial achievements like opting a mortgage, a car, and starting a family.

Most of the parents are also unable to give financial support to their children; they only provide shelter and food to their adult children.

Parents are already financially overwhelmed; they already have so many financial obligations like the utility bills, credit card payments, insurance premiums, and the retirement savings.

In addition to this, parents have to pay off their mortgage as well.

Thus, most of the young adults have no choice but using credit cards to meet their necessities.

Soon, they are becoming credit card company's dream customers. How?

By using the credit cards randomly, young adults are racking up huge debts and also not paying credit card bills on time.

Gradually, they are falling into credit card debt.

Being in debts, most of the young adults are not able to achieve their financial goals. Their income either goes toward the debt payments or they consume the whole income to meet their necessities.

Debts should be avoided. Why?

People should avoid debt traps as much as possible. Why? Because, once you fall into debt, your creditors or lenders know how to extract money from you.

  • They can seize any collateral that you guaranteed for your loan.
  • They can seize your bank accounts to pull out money.
  • They can force your employer to give them a certain amount from your monthly paychecks to them until the debt is fully paid.

Aren't all these sound like slavery to your creditors or lenders? However, following some ways can help you to avoid being a creditor’s slave.

Here are the 9 ways you can avoid debt in your life

Leading a peaceful debt free life should be your prime financial dream.

Debt has always been a thing of concern. Many people are there who fought back with their debt and won a peaceful financial life.
Nothing is impossible; you can achieve a debt free life by following some strategies.

Here you go:

1. Maintain low usage of credit cards

You will have to reduce the usage of the pesky plastics. This way you can stop the debt amount from increasing. This is the most important thing that you need to do to avoid debt trap.

Tip: Credit card shouldn't be used to buy daily necessities.

2. Maintain the on-time debt payments

Remember, debt payments are the main part of your payment history in your credit report. If you make on-time debt payments, it will not only help you maintain low debt levels, but will also help you improve your credit score.

Tip: Building a good credit score helps you apply for an auto loan or take out a mortgage at a favorable interest rate.

3. Check what you are spending your money on

You will have to keep a check on what you are spending your money on. There are various things that you might have included in your list of expenditure without realizing that you don’t actually require them.

If you can cut down these expenditures, you may be able to save lots of money.

You will then be able to use that money to pay off debts and become debt free.

Tip: Craft a budget to reduce unnecessary expenses. Stick to the budget by carrying a shopping list.

4. Maintain low balance on credit cards

It is important for you to maintain a low balance on the credit cards you have.

If you have a high balance on credit cards, the creditors tend to increase the interest rates.

As a result, you will need to pay more on the cards if you carry outstanding balance. This can create problems for you and you may ultimately miss payments on these cards. By doing do, you may incur huge debts.

Tip: Monitor your spending closely

5. Check credit reports from time to time

Your credit reports contain all the details of the debts you have, the payments, the missed payments, the hard pulls, and other personal information.

However, sometimes, wrong information get listed on your credit reports.

This can result in increased debt amount.

Thus, you need to check the credit reports from time to time to avoid such mistakes.

If you find out any mistake, dispute it by reporting it to the credit reporting agencies.

Sometimes, on-time debt payments might not get reported correctly on your credit report. Therefore, you need to dispute these too, to bring down the debt level.

Tip: You are eligible to get one free copy of your credit report every 12 months from each of the three credit bureaus.

6. Make the utility bill payments on time

You should also maintain the on-time utility bill payment; otherwise it can go to collections. The missed payments will be listed on your credit reports and can have a negative effect on your credit. This also results in increased debt amount.

Tip: If you often forget to make utility bill payments, set automated payment system.

7. Look for grants to pay off your debts

A variety of grants and loan repayment programs are available to help students to pay off their loan(s).

The federal government offers grants through various departments like the U.S. Department of Health and Human Services.

Also, try to find student loan repayment grants offered by your state.

Some non-profit organizations also offer grants to students who are working.

However, all these are based on some criteria. So, find out whether or not you are eligible.

You can also look for federal student loan consolidation programs and various other repayment programs to get rid of student loan debt.

Tip: More information can be found here: Guide to repaying your federal student loans

8. Start building a solid saving cushion

After making payments of your monthly obligations, try to set aside a certain amount to build a savings cushion.

Thus, you will be able to make a mortgage down payment or at least rent a house to start your family.

Tip: Follow the 50:20:30 budget rule. 50% of your monthly income for the fixed monthly financial obligations. 20% of your income for savings and 30% of your income for flexible spending.

9. Consider a side hustle

If the debt amount is deliberately gulping your monthly income, you have to find out a second source of income to increase your net worth.

Because you need to save money for your financial future.

Not only the retirement fund, but also medical insurance, life insurance, an emergency fund, child's education fund are mandatory.

If you don't work on these basic financial needs, you will have no choice but to acquire debt in the future.

Tip: Search online to find out seasonal jobs and other part-time job information.

Save money proactively; you will feel less financially burdened in life.

Lastly, being in debt is troublesome. At first, the creditors or lender will not let you sleep peacefully.

If you still don't respond, your creditors can charge off your account, which means, they pass the debt off to an external debt collection agency to pull out the cash from you.

If the debt is large enough, your lender can even file a lawsuit or sue you.

So, increase your net worth, cut down extra expenses to pay your debt at an accelerated rate.

However, if you can afford, take professional debt relief help to become debt free.

You can also pay off your debt by following some DIY debt relief strategies like debt snowball, debt avalanche, and balance transfer method.

You can also take out a consolidation loan to pay off your multiple debts.

However, whatever the method is, you have to be consistent on your debt payments.

Remember, to live a peaceful financial life, it is better to avoid debt altogether.