Debt is probably our oldest nemesis that we’ve all had to deal with at some point in our lives. Some people are lucky, hardworking, and smart enough to make it out alive, but some others get drowned in their own debts, which lead to their demise sometimes. So how do we deal with debt? Will debt always mean the end? Can it be prevented or dealt with in a healthier way? Let’s find out in today’s blog.
How to Make it Out Alive?
Here are a few tips to help you get it together and gradually get rid of your debt for good:
1. First of All, How Much Do You Owe, and to Whom?
Before you deal with the crisis, you have to address it first. How much money do you owe? Make an Excel sheet of all the money that you owe, followed by the names of the people to whom you owe it. This will help you get more organized, and nothing of the information will be lost or miscalculated. It’s always good to have a point of reference to come back to whenever things get confusing.
2. Now, Get Things In Order:
Set your debts in order of importance and start paying them one by one. This way, you won’t be late, your money will be better spent, and you won’t mess anything up. If you feel like you can’t do it on your own, you can always seek professional help. It can be a bit expensive at times, but think of it as an investment. This payment will save you a lot of time, effort, and money.
3. Know Exactly How Much You Can Spend Each Month:
Even if it means buying only the basic life essentials, you have to do it if you want to make it out of your debts alive. Deduct your debt payments from your monthly income, then get that amount of money and base your spending budget on it. It will be very suffocating at first, but then you’ll gradually start noticing that your monthly spending budget is increasing. It’s worth the wait and effort, believe me.
4. Getting an Extra Income Is Encouraged:
Getting a third or fourth job isn’t fun, but desperate times call for desperate measures. If you can land some freelance gigs or another part-time job that you can handle, it is always a great idea to make some extra money that will get you out of this crisis faster.
5. Don’t Pay Just the Minimum:
Paying only the minimum means more time that you will have to spend worrying about debt and coming up with ways to make extra money to pay it off. Getting rid of your debt is more than just paying the money or making money; it’s a decision. You have to really decide to get rid of it and have enough willpower to commit to doing anything you can to get rid of it. So start paying everything you can rather than just the bare minimum.
6. Seek Professional Help:
It’s always best when you leave it to the experts to deal with it. Ask a professional to create your payoff plan after considering everything about your situation. This employee does this for a living, which means you will be in good hands indeed. Figure out the best way to do it together, then start paying off that debt and getting rid of it for good.
7. Sell What You Don’t Need:
That’s always a great way to make an extra buck. Gather everything you have and put aside the things you don’t need anymore. That money will bring you one step closer to financial freedom.
8. Unexpected Cash Goes into Your Payments:
Whenever you get an unexpected amount of money, like a bonus, a gift, or anything else, put all of that money into your payment budget immediately.
How to Avoid Getting Into That Trap?
There are plenty of strategies and things you can do to avoid getting into debt. Let’s learn about some of them:
1. 10% of Your Salary Goes into Savings:
This strategy is always a great way to have emergency funds for any sudden issue that requires a considerable amount of money. This way, you won’t have to worry about getting into debt, and you will always feel financially secure.
2. Forget about What You Want, Focus on What You Need:
Your personal budget can always be tweaked to eliminate unnecessary spending habits. The easiest way to do this is to limit your online shopping to once a month or go to your favorite restaurants only once a month. You will improve your financial situation by eliminating the wants and spending only on the needs.
3. Keep Track of Your Spending:
Be sure to maintain a monthly expense sheet where you can track your expenses. By doing that, you can make sure that all your accounts and cards are paid on time, even if you have several.
4. Always Remember to Make a Clear Budget of Everything:
Planning out your monthly expenses can help you better understand where your money goes and where it can be spent. Every month, figure out how much you want to save, how much to put in your savings, and how much extra you can spend on necessities. You will know exactly what to cut if the time ever comes for you to cut down on your expenses drastically.
Bottomline:
It’s never too late for you to change your financial ways and get back on your feet and on the right track. Think smart, and don’t be afraid to invest in some professional help; it does come in handy.
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