So you’re in debt and you feel like you’re drowning. You’re not exactly sure how you got here, one thing led to another and here you are. We’ll be honest with you, getting out of it won’t be easy (Especially depending on how much in debt you are) but the good news is, it’s possible!
To help you out, we have put together five tips to consider as you go on this debt-free journey!
Assess The Situation: We know this might sound counterintuitive but you shouldn’t jump straight into action. Before you act, it is important that you assess your current financial situation and by this we mean e.v.e.r.y.t.h.i.n.g. All the details in between how much cash you have coming in and how much you have coming out are important to help you set the foundation for your plans on how to get out of debt.
Create A Budget: So now that you know where things stand (financially) in your life, it is time to create a budget (or edit yours based on this newfound information). This should be your holy grail, a plan for how to spend your money every month that takes into account how much you make and how much you spend. Remember though, creating it is the easy part, the only way for it to work is for you to actually follow it through.
Set Up A Debt Repayment Plan: With step 2 checked, you can now see exactly how much you should be spending on a monthly basis. The next step would be to set up a debt repayment plan. This simply means allocating a certain percentage of the money you are able to save directly to the repayment of your debt. Assuming you find holes in your spending while you drew up a budget, the “extra cash” found should also go into this endeavor. To start, collate a list of your debt(s) and how much you need to pay off monthly, prioritize based on urgency and allocate percentages of your savings towards their repayment. If need be, find areas where you can cut back (we’re looking at the Netflix subscription and daily coffee on your expense sheet 👀) or make extra income inorder to make larger or more frequent debt payments. Consider selling some of your items, finding a part time gig or requesting a raise to find more money to spend on debt repayment.
Change The Lifestyle That Got You Into Debt: It’s one thing to get out of debt, it’s another thing to stay out of it. As you are taking steps to get out of it, it’s important that you (honestly) pinpoint what got you into this situation in the first place and try to avoid it. If you believe it was a one time thing, something beyond your control then there isn’t much to do but if you notice habits or things in your life style that could be draining you financially, you need to be honest with yourself and start taking steps to nip the problem in the bud so you don’t have to read this article twice.
Build An Emergency Fund: We know, we know… you’re probably wondering : “shouldn’t every kobo be going into the debt repayment?” well, not really. Yes most of it should but, it would also be a good idea to set up an emergency fund. This will come in handy should an emergency arrive and possibly keep you from sinking further into debt because of it.
Like with any major lifestyle change, getting rid of debt takes time. It might seem really tough (because it is) but if you keep at it, sticking to your plans and not loosing sight of your goals, you’ll come out at the end of this journey glad you embarked on it.