Most of us love to travel and keep a bucket list of destinations for family vacations. People are of different tastes, and all have their own travel plans and dreams. In fact, not all are in a position to think of a leisure trip being haunted by debts. So, if you love to travel and find it difficult to think of it amongst the existing debts, let’s talk here about the ways to get rid of debt or alleviate it intensity to get more room for travel planning.
No matter which destination you choose across the globe to travel, managing your funds properly is essential. By understanding this financial management and how to get out of debt effectively, you have the freedom to enjoy your life by doing things you like and get rid of stress.
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Debt management for travel enthusiasts
For the travel enthusiast, the simple motto is “travel passionately, experience more, but spend wisely.” You can’t effectively do this if you are so much worried about your finances, don’t have any money left to travel, or you don’t know how to manage the money in hand effectively during a trip. Money and time are the two important components while planning for vacations or family trips, and planning is the key to success.
The needs and plans of someone who wants to take a round-the-world trip and spend months in traveling are different from those who focus on a typical family vacation and planning for a limited-time trip. Effective money management for entrepreneurs may be much trickier compared to individuals.
While many of the travelers don’t think of how to travel and get rid of debt together, it is good that you know how to pay off your debt effectively by going through the below expert tips. As an avid traveler, now it is the right time to alleviate your debt burden first.
Getting rid of debts to travel more
1. Make a budget
Remember you can’t spend more than what you have in reserve. To keep a close track of your spending habit, it is ideal to create a budget and monitor it closely. See how much you have and how much you can spend during travel and plan accordingly. For those who are new to preparing a budget, spending basically falls into three categories as:
- A fixed expense like mortgage, rent, utilities, cell phone, and other expenses which are bound to pay off monthly.
- Variable expenses as entertainment, dining, groceries etc.
- Debt expenses like loan repayments, credit card payment, etc.
You have first to set aside enough fund to meet your fixed expenses which are recurring every month. As per www.nationaldebtrelief.com/ experts, for effective debt management, you have to set a budget for the debt expenses next. Finally, you can put in the remaining funds under the budget head of variable expenses. Going a step ahead, one should think of setting aside money into savings as well.
If you find your expenses exceed income, then you have to be more vigilant and cut back on those expenses or try to eliminate the items under a fixed expense head. Like you can try changing your cell phone plan or get rid of some package on cable. When you have done with the budgeting, make sure that you have at least a $100 left out as the non-allotted fund.
2. Cessation of credit card spending
Spending money with credit cards isn’t bad, but only if you know to diligently use it. The primary problem with many people is that they don’t know how to use credit cards wisely. They tend to go out of control (obviously under the pressure of consumer marketing) on credit card spending. With this, spending exceeds their income, and they lose their financial balance to end up in debt.
Studies have shown that the biggest for people suffering from debts are credit card repayments. Until one begins to pay off the debts to take spending under control in light of the budget, don’t start using credit even when it is highly tempting. It is suggested to stop using the credit cards until you pay off all the dues.
3. Organize the debts
To effectively plan and get rid of the debts, you should first know how much you owe. An extensive ground study is needed to compile info about all the debts you have and figure out actual payables. For this, you can have to consider:
- Latest statements of credit card dues
- Loan statements
- Outstanding utility bills
- Mortgage statements
- Overdraft and fund advance statements etc. to name a few.
You need to consider the interests rates as well as the late payment penalties if any to add these up to find how much you owe. It may be difficult to see the huge numbers involved, but this is the right first step if you have to work on your debts to get over it effectively.
4. Smartly pay off the debts from smallest to largest
This is a crucial step in getting rid of your debt. After summing up the payables, next arrange them in order as from the smallest to largest. If you have a left-over fund during budgeting, add this amount to a minimum payment to clear your smallest debt. This will give you more confidence. You can take the same approach every month to pay off your next smallest debt and then clear one by one over time.
After each debt is cleared, roll over the amount to the next debt and make consistent payments. For example: If you pay off a $500 credit card bill with a monthly payment of $125, next add that amount too to your next payment to clear off a $1000 loan. It means if your minimum payment is $50 over the $1000 loan, once on clearing the $500 debt, make it $175 repayment each month without any impact on the budget.
This way, you can be patient by maintaining the excellent financial discipline to get rid of the debts, and it will take time. Based on the debt burden one has, it may take months to years for one to get rid of the accumulated debts by avoiding further debts.