Debt can feel overwhelming, as if it is never going to go away. This is especially common for someone who has an impulse to buy everything on credit and not the discipline to pay it back on time. Often banks and other financial institutions have really good offers and come up with reward systems which can be hard to resist.
If this behaviour resonates with your behaviour, see my practical tips to help you conquer your debt and live a debt-free life.
Tip 1: Commit to stop borrowing money
Learn to live within your means. How much ever you may earn, you need to able to pay bills and not only spend, but also be able to put away some in savings. Don’t incur more debts to pay off debts. This is the most terrible financial situation a person can ever be in. When you get paid next, go ahead and use most of it to pay off your debts. Do not spend on luxury items, only leaving enough left for your basic necessities until your next pay.
Tip 2: Pay more than the minimum
The first step to becoming debt free is to sit down and understand your budget. Use strategies (apps, a buddy system etc) to make budgeting work for you.
If you have surplus cash, don’t splurge. Look for a debt that you can pay-off using the extra cash. For example, if your monthly credit card bill requires you to pay a minimum of $130 and you have an extra hundred, then go ahead and pay $230. This way, you will be out of debt earlier than you expect.
Tip 3: Pay off the expensive debts first
Sometimes you have so many debts that you don’t know which debt should be paid off first. This, combined with overwhelm, paralyses you and can see you end up spending more. If this is the case, then list your debts and note against each the interest rate. Now choose the debt with the highest interest rate and work on paying it off first. Work your way down to pay off all the debts.
Tip 4: Find ways to make more money
It’s better to find ways and work extra hard to pay off your debt than do the same things and lead a predictable life filled with debt. Look for other ways where you can generate income. It could be a second job that you need to take up until you pay off your debts. Alternately, you can sell all the unwanted things in your house to make some extra cash and pay off your debts. Be innovative and get rid of that debt through any possible way.
Tip 5: Focus
It feels good to be in control of your debts every month. It would be even better if you were able to keep up the momentum. Have a whiteboard listing your debts on it and the progress you are making in clearing them off. As you tick off each debt, you will be motivated to clear all your debts.
Just be focused. Don’t waste your time wallowing in despair and guilt because you have so much debt. You can never go back to undo what has been done. The only way is forward and the only thing to do is just pay them off. More importantly, don’t make the same financial mistakes next time.