10 steps to get out of debt
Many people struggle to pay off student loans, credit card bills, house and car mortgages, personal loans, medical debts, utility bills, and many more.
Here are a few steps to get you started on getting out of your debt faster.
1. Make a budget
This may seem too simple to be effective, but it is. It is very important to know where your spending goes every month. By creating a personal budget, you can track even the smallest daily expenditures that will allow you to make a plan and have a clear idea of the money that comes in and out of your tab. It gives you a better handle of your expenses and helps you allocate your finances accordingly.
2. Research and make a plan
Don’t make the mistake of blindly paying off bills without having a plan. Believe us, it’s going to be your downfall. Always be familiar with the kinds of debts you have, formulate a strategic plan, and follow this religiously. Research and ask around people who successfully paid-off their dues in order to find the perfect method that could work for you and your finances.
3. Try paying more than the minimum amount necessary
After doing your research on the type of debts and methods of paying them off, arrange your loans according to the rate of interest. Start from the smallest and gradually work your way up to the largest. Continue to pay the required basic amount of these debts while at the same time try to pay more than the minimum monthly sum on a few that you can afford.
4. Focus on your needs
Not your wants. Learn to allocate your hard-earned money on the necessary and not on the temporary. You can always lay-off the usual cup of coffee or the occasional movie tickets, or the all-too-frequent dining out/food delivery service, can’t you? No? Well, then, you should. Besides, nothing beats a warm, home-cooked meal. It’s way cheaper and healthier.
5. Find another source of income
Without a doubt, getting yourself some extra cash could speed-up paying-off some of your long due debts. In the modern technology age, landing a part-time freelance job is not as hard as you might have imagined it to be. The internet is at your disposal. Use it to generate some side cash.
6. Stop using your credit card/s
One thing that should be on top of your list when paying-off existing debts is not to add more to it. If you are using multiple credit cards, consider closing them down one after another (after clearing out your outstanding balance, of course) and learn to manage your expenses without relying on them. Try to make ends meet by rarely using your credit cards.
7. Drop expensive habits
There’s nothing wrong with rewarding yourself after a hard day’s work or going on an occasional shopping therapy – that, of course, is if you have money to burn. But if you have a mountain of debt waiting to be conquered, bite back your tears and forget about this weekend's sale.
8. Channel your inner businessman
Another way to accumulate extra cash is by organizing your closet, and vending extra clothes, unused furniture or appliances, some spare electronics, to name a few. You can sell anything off in a garage sale or by simply putting them up on the internet or some buy-and-sell websites. This is also a wise way to tidy-up your house (and your debts, hopefully).
9. Consider a financial literacy program
You’ve almost paid off all your major debts, congratulations! You’re only a few steps away from your long-awaited financial independence and freedom. Equipping yourself with all the knowledge and skills in managing your money and future financial endeavors is a must. It’s also a way to avoid getting yourself into another series of stress-inducing monetary obligations. Be financially wiser and get a proper education.
10. Don't sacrifice the things that really make you happy
It may seem contradictory to the other points in this list, but don’t be too hard on yourself. Making lifestyle changes is imperative if you want to get out of debt, and yes, it can be stressful. Even depressing for some. The point is, if you’re having a hard time, don’t make drastic changes. Just gradually cut back on some things that you can go without. You’ll eventually make it there.