Debt elimination is a process in which you stop making payments towards your interest as you have paid off your entire loan. This involves gradually reducing your loan balance to nil. In case of credit cards if you make just the minimum payments every month then the duration for which you keep your loan you might be paying more than the actual loan amount in the form of interest. By paying off your loan you will not have to pay interest any more.
If you borrow money or in other terms take a loan you need to pay back the amount along with interest and some additional fees. In certain case taking a loan becomes inevitable like if you purchase a house or a car or for education of it you take out a credit card. Taking a credit card opens doors to debt. With too many debts in your name you can lose the sense of financial security. If you feel that the debt has become more than what you can afford with your current income then it is time for debt elimination.
Debt elimination is gradual process through which you can get back your financial stability. There are many way in which you can eliminate debt.
Frugal Living: One can start living on a very tight budget where he spends only when it is absolutely necessary and use the excess money for paying off your debt. This is a difficult option which cannot be adopted by many on a long term basis.
Earn more: Take on a new part time job to get extra income which can be used to pay off the loan.
Create a budget: Note down your income and your expenses for a month. If the expenses are more than the income then cut down on some of the expense that you can do without. Like taking lunch rather than buying it at work. Missing out on a weekly movie. Make sure that the expense and the income column match. If you have extra incomes then use it to pay off your loans.
Use the snowball technique: Make a payment plan. Start by paying off the loans with a smaller loan amount. These are easier to pay off. Then use this extra money to pay off the next loan.
Visit a credit counsellor: A visit to a credit counsellor will not hurt your credit score so you can at least take one free session with them. They can help you identify avenues where you can cut down expense or suggest debt conso