Nothing is for sure in this life, except death and taxes – as such debt brings on a new level of uncertainty in your life if you over indulge for the wrong reasons. Having debt can be a stressful experience, particularly when you face a life changing event like job loss, an accident or an increase in expenses due to having a child. Because, for these things there can never be convenient time.
Today, I would like to focus on the strategies people use to get out of debt in the shortest time possible. So if you’re ready to get on a path to financial freedom, it is important to have a plan for how you’re going to tackle that debt by incorporating some of the strategies highlighted here.
#1 Spend Less Then You Plan To Spend
This is merely placing a band aid on the wound that would stop you from bleeding any more cash. Financial survival first aid if you may call it that. Realize your spending habits and plan to spend less than you usually spend and save some money. Being conscious of your spending habits will enable you to recognize that your superfluous spending habits based on your wishes and wants – because most of us have wishes and wants that are bigger than how much we make.
From my numerous encounters, I recognized that the main reason why most people get into debt and stay in debt because they tend to buy what they want i.e. purchase depreciating assets such as cars, rather than get into debt to invest and increase net worth. Therefore, if you can only for a short period of time be satisfied with less than you would ideally want, then you can use the money saved to pay down your debt. In this way, by the time you have paid off your debt completely, you will have already adjusted and gotten used to spending less than you plan to spend.
#2 Create a Debt Payment Plan (Snowball)
I would consider this the wisest of all strategies of getting you out of debt because the end game is to pay your smallest debts first and build momentum to pay off the rest. The aim here is to keep you more motivated to pay off your debts. Therefore, first start with building your emergency fund of whatever amount you see fit, then rank your debts from the smallest to the largest using first amount and interest as the ranking factor and then get started. Starting with the biggest one might just make you tire and not progress even before you start.
#3 Pay Down Your Debts Aggressively
If your current income is too tied up paying down your current debts, then seeks out a secondary source of income and pay down your debts to reduce you debt balance. Remember debt does not have to be forever, so throwing some extra cash will go a long way in eliminating you debt quicker.
#4 Establish an Emergency Fund
There is no way to escape this one. You might be wondering why an emergency fund is so important – that because life happens and as it is not enough you are paying off heft amounts to bring down your debt, certain negative events could render you in an unfortunate state.
So if you do not have enough money in the bank, an emergency fund could bail you out during tough times. Most people borrow to cover emergencies and this is not a good thing for someone who is trying to get out of debt. Therefore, this fund will service as a financial shock absorber between you and debt – preventing you from going any deeper.
#5 Just Stop Borrowing
I mean, I cannot stress this enough. Have you ever wondered why these shylock businesses are doing so well? That’s because there are some people month-to-month on end, they are borrowing to get through until payday. Just make a conscious decision to stop borrowing to fund your lifestyle and live within (preferably beneath) your means. This is the most important prerequisite to getting out of debt fast. It will help you focus on the debts that you have and enable you develop a game plan out of the quagmire quickly.
So, if you are overwhelmed by your current financial circumstance or have difficulty maintain a monthly budget, then you can always seek out personalized advice from a credit advisers who will keep your situation in confidence, are non-judgmental and provide objective advice, guidance and information to help you get out of debt faster.
Being in debt does not suit you.
All the Best!