It has become a common trend for individuals, especially young people to live above their means and constantly be in debt. This is a clear indication of the insatiable needs of people, driven by a constant lack of contentment or comparison with others.
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However, incurring debt or the processing of repayment has never been a smooth sailing experience. Here is how to ensure you come out of debt, and stay out of it.
- Identify how much debt you are in: The first step is to find out how much you owe and identify who you owe. Some debt accrues alongside interest rates. Discover how much the interest rate has grown and outline all your debts from the highest rate to the lowest. It is so much easier to tackle things that have been clearly identified.
- Develop a plan: Now, you know how much you owe, it is time to develop an actionable plan to help you begin the process of repayment. In developing this plan, you must take stock of your current earnings, expenditure, assets and liabilities. This helps you know what is required to stay afloat, and how much you can let go as you begin to repay your debt. Your plan should contain the most urgent debts that need to be repaid as soon as possible down to the least urgent. Your plan should also include the rate of payment, that is, how frequently you will commit to repaying the debt. Create a detailed plan with realistic action points that will keep you accountable for your debt repayment.
- Develop multiple streams of income: Seek means to make more money. You are most likely in debt because you do not earn enough to sustain your living expenses. Examine the income that comes to you, and identify different ways to increase your stream of income. Look at streams that do little or no active participation, but maximum financial benefits. Examples of these streams could be affiliate marketing, content creation, digital creation etc.
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- Pay more than is required: Although, you have identified how frequent you will commit to paying the debt, ensure you pay more than is required at each time. This helps you to pay faster. Look out for monies that come to you as gifts, bonuses, tips etc, and immediately add them to your repayment plan. You will be amazed at how quickly you would pay up your debt.
- Cut down excesses and impulse buying: This phase of your life requires a lot of minimalism. You must ensure that you only acquire what you need. Once you start to reduce your expenses to the barest minimum, you might even identify liabilities that you own and can be easily liquidated. This adds to your cash flow and helps in repaying your debt.
Finally, be accountable to someone else. This is the only guarantee that you will see these plans through and not succumb to taking more loans or debt. Find someone who has a great financial discipline and take them on your journey to being debt-free.
With all of these tips, you will not only keep your head above water, but you will also build habits that will ensure you are financially free.
Featured Image Source: Disease Called Debt
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