Being in debt can be a stressful experience. No matter what your circumstance is, if you signed for a loan, you are obligated to pay it back even if you do not have a job, or increase your expenses due to the addition of a new member to the family.
Sometimes debt can be an unintended consequence of too much spending for vacation .. or overspending any time of the year, especially festival seasons. Many people try to get out of debt. But most of them fails due to proper planning and implementation.
There are so many people who are getting out of debt every single day and that too in a short span of time. How do they do that?
To get out of debt, you need a plan. You need to execute that plan. Do you think it is easier said than done?
Here are 7 strategies to help you to achieve a debt free life
Clearly define your priorities
If you want to get out of debt, you need to understand the difference between needs and wants. We cannot compromise on our basic needs food, water, and shelter. But we can avoid the luxury which we want to enjoy. Try to focus on your debt as high as you can on your priorities list. Aside from the essentials of family and living expenses, consciously make getting out of debt the highest priority you can.
Begin thinking that every purchase counts – no matter how small it is. Pennies add up so much faster than you’d think. Your $1-$10 purchases can have a tremendous impact on your get out of debt plan. Don’t be fooled into thinking small purchases are insignificant.
Prepare a budget with a goal of paying off your debt
You should have a proper plan one how to manage your finances. The best way is to stick to a budget. Developing a budget that tracks your income and your expenses is crucial to getting out of debt in a short period of time. It will help you gauge where you are with your finances so that you can move forward toward your goal. It will give you a clear picture of whether you have money left over, which is called a surplus, or if you are in the negative, which is called a deficit. The goal is to increase your surplus and use that money to pay down your debt
Make a conscious decision to stop borrowing money
If you want to get out of debt, then you have to stop using debt to make a better lifestyle. This mean no more shopping with a credit card, no additional purchase of any kind of furniture, electronic equipment, or automobiles. You have to focus on how to get out of debt you already have. Do not get into any kind of financial commitment.
Establish a starter Emergency fund
Make sure you have an emergency fund. Life is always unpredictable. So at the time of creating the budget always make sure that you have included a category for an emergency fund. You do not need to keep a huge amount towards this. But this category will save you from breaking your budget in many situations.
Find out some side hustles to help you earn some extra money.
You need to try to find out a side hustle which generates some passive income. If you are planning to pay off your debt within a short span of time, your current income might not be enough to manage the household expense and debt payment. And also your finance requirement might increase when your family size increases. Making a passive income will help you to save some money for future.
Analyze your debt payment option
Having everything written out in front of you is really the key to success here. What you need to do is make a list of all your debts- the name of the creditor, interest rate, balance, minimum monthly payment. Also find you how much you will need to zero-out the cards’ debt within the period you wanted. Remember to include the loan from friends and relatives.
Create a debt payment plan
Once you are clear about how much you have to pay off and what is your debt payment period, then create an action plan. Before that contact debt providers and negotiate for a lower interest rate. If you can get it, that world is a great deal. Once this gets fixed create your plan. Determine how much you can pay towards debt each month. Allocate it to all types of debts (if more than one) according to the repayment plan. Continue this process until you pay off all your debt.
Getting out of debt can seem overwhelming, but the reward is priceless. Your willingness and dedication can get you success the way you want. I hope this would be helpful for you to get out of debt.
What is your strategy for getting out of debt? Please comment below.
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