5 ways to get out of debt
ways to get out of debt
Getting out of debt might seem like a difficult task or project. It takes proper planning and determination to be debt-free because it can be overwhelming and frustrating. This is especially when loan sharks won’t let you breathe by using calls and threatening messages to chase you.
Being in debt can affect your blood pressure and can affect your sanity. This is because a lot of pressure comes from your lenders.
However, there are six possible ways to be debt free if you can adhere strictly to and follow them.
1. Set a goal or a plan
Every successful achievement and every success starts with a goal. Write down your goals for how to eliminate your debts. This is the only way to remain focused. A smart goal is what will help you eliminate every financial distraction that will hinder you from being debt free.
2. List out your debts and get the details
In order to be debt free, you need to take action. Make an accurate list of all your debts . Get more information from your lenders in order to have a better picture and knowledge of how much you owe. With this, you will be able to track your last balance, last payments, the interest incurred and every necessary piece of information you need to know.
For debts that don’t have records from friends, family, and relatives, ask for more information to track your progress.
3. Set a repayment plan
A repayment plan helps you to be consistent in the repayment of your debts. The goal is to be debt free as fast as you can.
You can use the highest interest rate method, also referred to as the avalanche method. This method requires you to list all your debts from the highest to the lowest. You continue with your regular payment to pay the debts then use your leftover from your budget to reduce the loans with the highest interest rate.
You can also choose to use the low-interest method, known as the snowball method. It entails you paying your debts the regular way. To pay off the loans with lowest interest rate, you pay with the remains from your budget. This helps you track your progress and also motivates you.
4. Declutter unwanted things
Learning from the popular book, “The Smart Money Woman,” by Arese Ugwu, to be debt-free you might need to sell those excessively expensive bags, shoes, and clothes for now.
This might be the cause for the debts initially, so decluttering these things will yield you money to offset some debts.
5. Reduce your expenses
Excessive spending will only keep you in debt. Having a plan is not enough to keep you out of debt but also your expenses. Avoid spending more than you earn. Find ways to cut down on your expenses. You can do this by avoiding eating out, preparing your own meals, reducing your mobile data usage, reducing your outings, especially buying of ‘aso ebi’ etc.
Instead of spending excessively on unnecessary things, use the funds to pay your debts.
6. Find other sources of income
If your debt is more than your income, it means you need more streams of income to pay off your debts gradually.
You shouldn’t take loans to pay off debts. After making a plan, a budget, and cutting off excesses, you need to increase your income. Look for ‘side hustles’ as Nigerians will call it, especially if you have a ‘9-5’ job.
When you are finally debt free, you need to have the financial discipline to avoid being held by the shackles of debt.