Paying off debt is a essential, and living without debt gives you a freedom that most people don’t even dare to dream of. You might say that it can’t be done, that you have too much debt, but you have to start somewhere.
Use the following 5 tips from the experts at DebtBusters, and start taking control of your finances:
1. Alter your mind frame.
It’s easy to become disheartened and give up when you feel that your situation is hopeless. The truth is that there is a way out of every negative circumstance. By changing the way you think you will become more than capable to overcome your debt problems. Think of your situation as being temporary and focus on short term goals to better your circumstances.
2. Be honest about your situation.
Make an account of your income and expenses. How much money do you make each month and how much money do you spend. Include every income and every expense you know of and be honest with yourself. This is the most important step of all steps as it’s critical to have a good overview of your n only current situation. You can only start to change your financial circumstances once you have come to terms with the situation you find yourself in. Also inform people close to you, you never know who will come to the party and help you out. This is also important for your state of mind, once they know there will be no need to put up pretences and deal with the burden on your own.
3. Build up an emergency fund.
Your first goal is to get an account where you build up a lump sum for emergencies. We call it emergency funds and they are for emergencies only. You are only allowed to touch it when there is a real legitimate emergency. Everything that can be planned for is not an emergency; your wife’s birthday or Christmas is always at the same date. This account will make you sleep well at night as you know that if your refrigerator breaks down or something happens to your car, you have money to pay for it. Be disciplined on this.
This is the time to take action, reduce your expenses as much as you can. You will need to make sacrifices to reach your goal. For example stop eating out, reduce your expenses. Eat rice for dinner if you have to. Take an extra job delivering pizzas, do whatever it takes to reduce your expenses and increase your income. We didn’t say it would be easy, but it can be done.
4. Start rolling the debt snowball.
List all your loans ordered by smallest to largest and pay minimum on all loans except the smallest one. Use all your excess money to pay extra on this loan until it is paid off. Once it’s paid off, take the extra money from it and add it to your payment on the second smallest (which is now the smallest one). Your debt snowball is getting bigger and bigger until there are no loans left to pay.
5. Budget, budget, budget!
We can’t emphasise enough how important it is to budget. This must become a tool that you use when in debt or debt free. It gives you the ability to manage your finances effectively and to not let yourself slip. For more advice contact a DebtBusters for expert guidance.
