Getting out of debt can seem like a difficult task or project. It takes good planning and determination to stay out of debt because it can be overwhelming and frustrating. It’s especially when loan sharks don’t let you breathe by using threatening calls and messages to hunt you down.
Being in debt can affect your blood pressure and your mental health. This is because a lot of pressure comes from your lenders.
However, there are six possible ways to be debt free if you can strictly adhere to and follow them.
1. Set yourself a goal or plan
Every successful accomplishment and success begins with a goal. Write down your goals to know how to eliminate your debts. It’s the only way to stay focused. A smart goal is what will help you eliminate all the financial distractions that will keep you from becoming debt free.
2. List your debts and get the details
In order to be debt free, you must take action. Make an accurate list of all your debts. Get more information from your lenders so you have a better idea and knowledge of what you owe. With this, you will be able to track your last balance, your last payments, the interest incurred and all the necessary 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 up a repayment plan
A repayment plan helps you be consistent in paying off your debts. The goal is to be debt free as soon as possible.
You can use the highest interest rate method, also known as the avalanche method. This method requires you to list all of your debts, from highest to lowest. You continue with your regular payment to pay off debts and then use the rest of your budget to reduce loans with the highest interest rate.
You can also choose to use the low interest rate method, known as the snowball method. This implies that you pay your debts on a regular basis. To repay loans at the lowest interest rate, you pay with leftovers from your budget. It helps you track your progress and also motivates you.
4. Declutter unwanted items
Learning from the popular book, “The Smart Money Woman”, by Arese Ugwu, to be debt-free, you may need to sell those overpriced bags, shoes, and clothes for now.
This could be the cause of the debts to begin with, so decluttering these things will earn you money to offset some debts.
5. Reduce your expenses
Overspending will only keep you in debt. Having a plan is not enough to save you from debt but also from your expenses. Avoid spending more than you earn. Find ways to reduce your expenses. You can do this by avoiding eating out, cooking your own meals, reducing your mobile data usage, reducing your outings, including buying ‘aso ebi’, etc.
Instead of overspending on unnecessary things, use the funds to pay off your debts.
6. Find other sources of income
If your debt is more than your income, it means you need more income streams to pay off your debts gradually.
You should not borrow to pay off your debts. After making a plan, a budget and cutting the 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 free from your debts, you must have financial discipline to avoid being held back by the chains of debt.
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