5 magical steps to being debt free

5 steps to being debt free

Five magical steps to becoming debt free

Did you know that Credit Counselling Singapore will be expanding its coverage to offer services of a centralised repayment solution for debtors? Soon debtors will have an avenue to rely on for a reliable entity to offer debt consolidation service. This will be moving one step towards being debt free.

And the reason the government is setting this up is In view of the ever increasing number of people amassing a mountain of debts. The authorities are finally stepping in to facilitate a more “debt free” society. The services are especially targeted towards those with substantial unsecure loans above their ability to pay.

If you are facing a debt problem, it’s time to take massive steps towards being debt free eventually. And here are 5 steps you want to consider taking towards that path.

1. Awareness of your debt problem

The first step to being debt free is to be aware that you DO HAVE A PROBLEM with managing your finances. Awareness that you’re spending beyond your means is the first important step. Start consolidating your total income vs your total expenses and decide what needs to go.

​2. Having a plan

Have a concrete plan in mind how you can tackle your debts. Set small goals towards eliminating them. Oftentimes, we get overwhelmed by the humongous amount of debt and got paralysed into a helpless mode. Breaking up your debts into smaller chunks and having a viable plan will allow you to take reasonable actions towards repaying them bit by bit.

​3. Communicate with creditors

Many a times, because of the mounting debts, a debtor evade all forms of communications with their creditor. This will at most times escalate the problem as your creditor have no idea what is going on. Be in touch with your creditor, share with them your plan for repayment. Chances are, majority of creditors would be happier to work with you on a repayment plan than to seek legal exhaustive legal recourse.

​4. Prioritize your repayments

Problem with most debtors is that they borrow more loans to repay an existing loan. This is like sawing off a larger part of a leaking boat to patch up a leak. Eventually the holes get larger and larger. If you are facing credit card bills and bank loans, always make sure where the ones with higher interest is and prioritize your repayments towards those first.

​5. Take massive action

Take massive action. The steps above sounds logical and simple. And yet, many of us knows what to do but don’t do what we know. It is time you start taking massive actions towards being debt free.

There you have it. 5 steps to being debt free. Remember, start with awareness and admitting you have an issue. Have a better grip of your finance. Come up with a solid plan on repayment. Communicate your intentions to your creditors. Prioritize your payments. And take massive actions.

If you continue to remain in ignorance of your debt problem, chances are high that one of these scenarios may happen. 1) Your creditors take you to court. 2) Your creditors engage the services of a professional debt collection agency in Singapore to recover their debts. 

Regardless, if you don't start taking some form of action, it's unlikely that your debt will magically evaporate into thin air. ​

The real risk of not ever being debt free is …. Doing nothing. Start knocking out a small debt first, so that you can get a quick win. Momentum is KEY!