Getting in to debt is a bad idea, but once we’re in debt there’s not much we can do about it until it’s all paid off and we have learnt our lesson the hard way. Sometimes it feels like we’ll never be free of the burden of debt, but it’s possible and it doesn’t have to be far away, that satisfying feeling of paying off the last bit of debt.
The first thing you need to do is to stop accumulating new debt. Many people get into debt and take out more loans to buy things they don’t need or to pay for existing overdue loans. If you’re in debt, than you have to cut up your credit cards and forget about taking on any new debt that will only set your progress back.
Work out a budget that works for you. Your budget should be suitable to your income and lifestyle needs. Analyse where your spending most of your money and see where you can cut back. Once you have a clear budget written out it’s much easier to see where cutbacks can be made and which expenses can be eliminated completely.
Add up everything you owe and the minimum repayments required for each loan or credit card you possess. The reality of your situation may be shocking so prepare for it. You mightn’t even have realised how deep in debt you really are. Now you’re fixing it so don’t worry about the figure so much, you’re taking a step in the right direction.
The minimum amount is the amount you have to pay off each month. If you just pay this amount off than you might be stuck paying of your debt for years, maybe even a decade. This is your obligatory payment and should be a part of your budget.
Looking at your income and expenses and see how much extra can you afford to pay off your loan. Take this amount and put it towards your lowest limit. Once you’ve paid off this limit, go to the next loan on your list, and keep going until you’ve paid everything off.
Avoid spending money on silly things like going out every week, buying new clothes when the ones you already own are fine. Don’t waste money, anything you have left over should either go for debt reduction or into your savings account. Leave the real treats for when you’re out of debt.
If time permits than you should try to find an extra source of income. Every hundred dollars or so you put onto your loan, is less in interest you have to pay back and you’ll be able to shorten the loan term dramatically. You can write and try and sell your stories and articles, or you can get a night job in a bar or weekend one at the shop. It doesn’t matter what you do as long as the money you earn is going on debt reduction.
Any extra money that comes your way from winning the lotto to getting an inheritance should be used to pay off your debt. This way you’ll be able to enjoy your hard earned money sooner. Once you’re out of debt, stay out of it. The burden of debt is not worth any material thing.