Debt, if left unattended, is bound to cause insurmountable damages to us. Therefore, getting rid of them should be of paramount importance to anyone who has them. If you’re drowning in debt and dying to get yourself out of it, here’s 6 ways that may just help you to do so.
Have A Plan
It is important to devise a repayment plan and stick to it. Ensure that a portion of your monthly income goes to the repayment and the amount should be significant and realistic. The amount allocated must also be able to gradually reduce the overall debt amount.
Clear The Smaller Debt First
Assuming you have a total of three sets of unpaid loans. Ideally, you should work towards clearing off the smallest one first. By doing so, you eliminate the number of your existing sets of loans from three to two. The reason for this is to help you achieve the “small victories”, that are important to keep you motivated in your arduous journey of becoming debt free. However, it is also important to put other factors into consideration as well, such as the payment due dates and interest rates. If you have a loan that has a 5% interest rate and another one with 25% interest rate, it is then only logical to prioritize eliminating the 25% one first.
Change Your Circle
In the midst of our money problems, it is also important that we pay attention to our social circle. If we are in debt and continuing spending time with friends who enjoy exquisite and expensive lifestyles, maybe it is a better idea to avoid joining them for the time being (at least until we become debt free again). At such times, we simply cannot continue to indulge in $40 catch-up meals and $50 karaoke sessions. An occassional treat is fine but ultimately, focus, discipline, and perseverance is all we need.
Change Your Habits
Our poor financial state is often a result of our day to day spending habits, rather than a massive, one-off purchase. Therefore it is important for us to align our lifestyle habits to our financial capabilities. Those innocuous $5 breakfast sets that we reward ourselves every morning may seem insignificant but it actually adds up to $1,825 a year. Your chance of achieving debt free status will increase exponentially if you are willing to replace those $5 breakfast sets with some homemade sandwiches.
Borrowing may be deemed sensitive and shunned upon by many but if there’s someone who trusts you and is willing to help, it can relief you the burden of the usually-high interest rates and legal pressure from the various banks and loan firms. However, this route must be treaded carefully and repayment must be carried out timely as promised.
Lastly, track your progress. Being able to visually witness our debt being reduced works wonders to our self-belief and confidence.
In case you’re wondering, the above ways are indeed tried and proven ways to get one out of debt.
No prize for guessing who the sucker, who had to use them, was.