Having a sound and reliable debt management is critical to getting out of debt within a short time. However, is quite easy to give up when you consider the amount of time and effort that is required for debt elimination. But at the same time, it’s possible to pay off your debts and still be able to save some money if you can follow some easy and proven strategies. In this article, you’ll learn about ways you can clear your debt and build a better financial future.
Figure out the best debt repayment method
There are multiple ways through which you can deal with your consumer debt and you should decide which one suits your current situation. The high-interest rate method helps you deal with debts with high-interest rates first. After you’ve dealt with the most expensive debt, you focus your resources on dealing with the loan with next highest interest rates on the list. According to financial experts, this method helps you to tackle the most expensive debt which is critical to ensuring your debt burden becomes lighter.
Alternatively, the snowball method focuses on the least expensive debts on your list. After clearing the first debt, you move to the next realistic emergency loan with the smallest interest rates. The good thing about this method is that it builds your morale since you can see progress quickly. Basically, you should look at your financial situation and decide which method is appropriate.
Put it into writing
Generally, most people will find it extremely hard to work with a debt repayment plan that is not applicable to the current financial conditions. When you settle on a plan, be flexible enough to adjust it along the way if you realize it’s limiting your progress. As a rule of thumb, you should put your plan in writing because doing so increases the probability of achieving the desired results in record time. The moment you write down the plan, you send sufficient signals to your brain that you are fully committed to climbing out of debt and this makes the process easier to handle.
When writing down the plan, it’s not necessary to make it complicated. To start with, write down all your debts with their corresponding minimum payments as well as their due date. Then you can pick one loan towards which you’ll be making some additional payments. When everything is clearly recorded, make sure you keep the record in a place where you can quickly refer to it.
Reveal your plan to someone who can help you achieve the goal
Today, many people are relying on the internet to share their financial journey and remain accountable to the course. Just like them, you can do this by starting a quality blog or even a social media page where you’ll be constantly updating your progress. The good thing about using this method to stay accountable is that you get to interact with people who are dealing with similar debt issues. Alternatively, you can also join online forums that are dedicated to paying off debts. In addition, you’ll find tips on these platforms that can help you achieve your debt repayment objective faster.
But if you can get a friend or family member who is ready to support you, it can be rewarding. Particularly, it would be more appropriate if they are also working towards clearing their debts because you can count on their support. Once you find the most appropriate way to remain accountable, ensure to share your challenges and progress every step of the journey.
Create and stick to a budget
Debt repayment won’t be achieved in isolation. Your overall finances have to be optimized to support this quest. To do this, you need to create an actionable plan that is going to guide you on how much money you can afford to spend on a monthly basis. Before creating your budget, it’s important you figure out how much money is coming in every month to know the healthy expenditure levels. After spending your income, there should be some money left for monthly savings as well as enough for clearing your debts.
To make sure you don’t overspend, refer to your budget constantly to stay on the safe side. Always remember that overspending can lower your ability to repay your debts in time. However, it’s always prudent to ensure that your debt repayment plan fits into your budget without making you strain financially.
Avoid accumulation of additional debt
If you continue to use multiple credit cards and applying for additional loans, your financial profile may get worse. Basically, if you continue to accumulate new loans it can be difficult to stick to your debt repayment program since it’s likely that progress will be sluggish. The best way to get past this obstacle is living below your means to ensure there’s enough money to deal with your debts. If you want something badly, try to avoid paying with your credit cards but instead, save the cash required to make the purchase.
Take small occasional breaks whenever necessary
Climbing out of debt is not an easy task and it could take you a few years before you become completely debt free. However, this depends on your outstanding debts and how much you can be able to repay consistently. If you’ve been following the debt repayment plan for a long time, it might begin to feel like a burden. As such, plan some occasional breaks where you can take a few weeks off the plan and enjoy yourself. In addition, you can use these breaks to save some money to make some important purchases that you wouldn’t have afforded when dealing with the debt.
Following your debt repayment plan religiously sets you on the path to financial freedom. However, you also need to ensure that you develop a habit of saving a portion of your income. It’s important that you always remember why you have decided to clear your debts because it will give you a reason to move on even when the journey seems difficult. In addition, if your cash flow is dwindling, then it’s time that you started generating some additional income so that there will be enough money to pay your loans.