Being in debt is like sinking in quicksand. While there is no instant way to make you debt-free, a measure of commitment and patience will put you on the road to becoming debt-free. If you are diligent and focused on achieving your dream of being freed from debts, we’ll give you a nudge to help you on your way. To ensure that you don’t get stuck in debt, read on to find out what NOT to do.
- Dipping into Retirement Savings. Have you begun putting aside something for your retirement yet? If you began saving for retirement as soon as you started earning, you must leave that corpus untouched until you decide to put your feet up. Clearing a debt with your retirement savings is not a good idea because it could derail your financial plans.
- Transferring Your Balance to a New Credit Card. If you think transferring your outstanding balance to a new Credit Card will rid you of a debt, think again. By getting your new card issuer to give you a cheque to clear dues on a previous Credit Card, you are merely transferring your debt, not getting rid of it.
- Borrowing Money from Friends or Family. Have you often heard your friends grumble about that guy who didn’t pay them back for something? A word of advice: Don’t become ‘that guy.’ Think carefully before bringing money in the way of relationships.
- Filing for Settlement. As a last resort, you may think of “settling” your debts. While your bank will accept the settlement of your loan or Credit Card dues, this would reflect negatively in your CIBIL report.
If you thought these were easy ways out of a debt trap, you’re mistaken. Why don’t you consider liquidating some assets or investments instead to clear your dues? If that’s not a suitable option for you, you could try supplementing your income to tide you over in this crisis.
Need more advice? Read about how to manage money when in debt