If you’ve come here, chances are you’ve realized you’re in debt and you want to change that. Congratulations, you’ve taken the first step, which is acceptance. Now all you have to do is follow my lead and I assure you, together we’ll reduce your debt in no time.
Debt is a part and parcel of financial independence, sooner or later, everyone who tries to make it on their own has to face debt. However, it is nothing to be ashamed of, if you’re serious about it, it can be taken care of quite easily. Whether it’s through budgeting or a smart debt plan in place, dealing with debt is in your control.
Here mentioned below are 5 steps you need to follow:
Start with Budgeting
If you find yourself in debt, the first thing that you should do is start budgeting. If you don’t have a monthly or weekly budget, you’ll be surprised how much money you waste on a day-to-day basis.
Budgeting can help you manage your money and ensure that you have a few extra bucks at the end of the month. So, whether it’s cutting back on dining out, entertainment, or carpooling with your friend for a few months, know that these sacrifices are necessary and can go a long way.
However, you need to keep yourself in check and make sure that the money you save goes towards your debt payments and not other leisure activities.
Check Debts with Higher Interest
Another thing you should do is make a payment plan that consists of all your debt. Arrange the debt, the one with a higher interest rate goes at the top, following others with lower interest rates.
A common mistake people dealing with debt make is that they try to deal with all their debt at the same time. Paying the minimum amount required on all your debt payments isn’t beneficial in the long run. Thus, tackle one at a time.
Look for Ways to Increase Your Income
Once you start dealing with the highest debt, the second step is to invest your time in passive income. Try doing small gigs on Fiverr or Upwork, or try taking up a hobby that pays.
While many people might not know about it, there are several ways you can make money online, learn about them, and find something you like. Once you have some extra money coming in, you can channel that to your debt payments and get rid of the debt quickly and easily.
Try to Exceed Minimum Payment Amount
As mentioned earlier, paying minimum payments on your debt is not going to do you any good. Thus, you should try to pay as much as you can to get rid of the debt quickly.
While I’m not asking you to dump all your savings, you can at least invest half of them in clearing some debt. Money sitting in an account somewhere isn’t beneficial if your debt is collecting higher and higher interest. Therefore, you must try to be tactical while making payments.
Evaluate Your Success Each Month
Getting rid of debt is a gradual but rewarding process; however, you won’t notice a change if you don’t map your journey. You need to have a plan and evaluate yourself on a monthly basis. Hold yourself to the goals that you have set, and you’ll start seeing significant changes in the very next month. Oh, and please don’t forget to be consistent as this process demands consistency.
Now that you have a list of things that can help, all you have to do is get started. Know that it will take some time, but if you stay consistent, you can make a considerable difference in less than 90 days. I wish you all the best, my friends!