There’s no way to sugarcoat the debilitating effects of possessing too much debt. It can rob us of our happy moments and put so much pressure on our shoulders than it can often feel like we’re drowning. In these scenarios, there’s no easy way out: you need to work hard and get yourself back in the black. While this can be tough, it’s not impossible: far from it, in fact. Below, I’ve put together ten tips that’ll help you get rid of your debt…for good.
Stop the Rot
Before you do anything else, it’s important to stop yourself from falling into more debt. You can start that right now, in fact. While you won’t be actively putting money back into your account, you will prevent yourself from doing more damage. The best time to stop spending and start saving would have been ten years; the second-best time is right now. Slow down, pause any big expenditures that are on the horizon, and you’ll be on the right path.
Taking Your Head out of the Sand
OK, now it’s time to start tackling the debt. But you can’t do this until you figure out exactly what you owe and to which organizations you owe it. In many ways, this is the most difficult part of the journey: you’ll be confronting your problem head on. It takes courage to stand up to your mistakes, and by going through all those pieces of paper and confronting your bank account, you’ll be taking a bold and significant step to becoming debt free. On a more practical note, you’ll also be able to make sense of your debts and move on to formulating a plan (more on that later).
Creating a Plan
Alright, now you know the extent of your troubles, it’s time to sit down and breathe. The hardest, most awkward part is now over. What you’ll do next will put yourself on the path to becoming debt free. Remember: many people fall into debt. That’s all too easy. It takes courage and a plan to get out of it. Having any sort of plan is better than no plan at all. So long as you’re working toward getting all your finances in order, you’ll be on the right track.
You don’t have to go through this uncomfortable time alone. There are plenty of resources you can use that’ll motivate, inspire, and give you access to information that you couldn’t possibly know yourself. Make sure you’re checking out financial websites like Fortunate Investor, which will be an invaluable resource on your journey out of debt and beyond. As well as those expert voices, you should also talk to the companies you’re in debt to as they may have solutions that will make managing your debt easier.
It won’t be pretty reading, but you should also take a look at your credit score. It’ll contain a wealth of information relating to your financial information. You’ll also be able to see if any information is incorrectly listed: a simple review might make it easier for you to get loans, renegotiate debts, and so on. For other benefits of knowing your credit score, check out this Guardian article.
Change Your Habits
It’s not just enough to start paying down the debt: you need to change your lifestyle, the lifestyle that contributed to your problems in the first place. For example, if you’re living a $40,000 a year lifestyle but only earn $30,000, then it’s obvious that something has to give: you either need to make some sacrifices or find a better paying job. Some people can spend more money than they realize just by mistake, so make a note of all your incomings and outgoings. It’ll make it easier to understand how much disposable income you have to play with.
A Frugal Life
With that being said, you might be better served by living a super frugal life to start putting a dent into your debt. You’d be surprised at just how much money it’s possible to save. Of course, this won’t always be the most enjoyable of tasks: it might mean eating super inexpensive meals, foregoing those fun weekly drinks, and putting a complete stop to any trips away. But remember that it won’t be forever: and once that debt is gone, you’ll be able to enjoy all your usual activities all the more knowing your finances are in sound shape.
Prioritize the Debts
Not all debts are created equal. Some will be more damaging to your credit score and be more costly than others. As such, you’ll want to prioritize your debts, making it a priority to pay off the ones that have high-interest rates or less attractive terms than other debts. It might be that it’s a good idea to consolidate your debts, so that they’re all in one place, with better terms for you. You should be aiming to spend as little as possible in interest: this is money for which you get nothing in return, after all.
Spending Money To Make Money
Just because you’re in debt, that doesn’t mean all debt is bad. In fact, spending more money can, in fact, be a good thing, so long as it’s spent wisely. For example, if you want to progress in your career but lack a certain qualification, then spending money on a course that will lead to obtaining that qualification would be a good idea. Debt isn’t inherently bad: if you’re spending money that will eventually lead to more money, then that’s sensible. It becomes irresponsible when the debt is used to finance instant pleasures that offer no return.
Be Proud of Yourself
You have to stay motivated when you’re trying to get out of debt, and one of the best ways to do this is to see overcoming your debt as a personal achievement. And you won’t be telling yourself a lie because having the determination and will to overcome a problem is a reason to be proud of yourself!