Dealing with debt? Read to the end.
Debt is something that holds one back financially and in so many other ways. Many people are in debts that they cannot account for.
Borrowing is not a bad thing, but, borrowing for the fun of it and not solving any substantial problem is the issue that needs to be tackled.
By the way, we recently published a blog showing you how to support yourself financially at school in 2021. That would do you a lot of benefit if you’re a student. If you aren’t, you can share it with a student you know.
The aim of this article is to show you tips to help you get out of debt this year.
The way out..
1. DO NOT borrow if you don’t have any tangible means of repaying
In fact, if you don’t have a stable source of income or ways to get funds, it would be a bad idea to borrow.
2. DO NOT spend above your budget
In other words, live within your means, not above it. Fight against impulsive spending. This deteriorates your financial capabilities.
It is wise to create a budget for yourself and ensure not to spend above that.
3. DO NOT borrow to acquire liability
If you must borrow, borrow to expand a business, buy stock/shares, invest or buy a landed property.
All the above mentioned will add value over time and eventually yield profit.
4. ALWAYS have some savings kept aside for rainy days
People who have made saving a habit can attest to the fact that it is a life saver. Some may think that saving is done only when you have extra cash but it is not so.
Saving is mostly sacrificial. Sometimes deprive yourself of that ice cream, fancy new dress or shoes, designer bags and jewelleries, etc. and save.
I recommend our article on how to save money at university, poly or college.
5. Borrow only when necessary
Also ensure you have the means to pay back.
Dealing with debt is not something a lot of people are ready to face squarely. That is why many people are still struggling with it.
How to avoid running into debt
Money is a very powerful tool and lack of it can lead to over thinking. To avoid running into debt, it is important to do the following:
1. Identify what made you borrow in the first place and work on it if possible to avoid future occurrences
2. Cut off all excesses. Do not spend on unnecessary things.
3. Always have emergency funds, no matter how little it is.
4. Always work with a budget.
5. Don’t be an impulsive spender but a disciplined one.
6. Don’t borrow except it is absolutely necessary.
7. Cultivate the habit of saving.
All the above are smart choices and it will help save you the embarrassment of being a debtor in the future if implemented now.
How to get out of debt
If you’re already in debt then this section is for you. I’m sure you must be thinking of a million ways to get the money to pay back that’s if you don’t already have a plan.
You must be able to manage your debts if you intend paying back in record time.
The first thing you should do is to list out what you owe, who you owe and the level of their urgency. The most urgent should be the first on your list and the least urgent should be at the bottom of your list. Doing this keeps you aware of all the money you owe.
Don’t just create the list and do nothing about it, update it periodically by ticking off paid debts and rearranging as you progress in paying them off.
Secondly, decide which debt to pay off first. After making the list of everything and everyone you owe, you should decide on which one to pay off first and then plan towards it.
Now that you are aware of how much you owe and the time you have to pay back, it is important to make clear plans of repayment. One of such plans could be allotting some percentage of your income towards clearing off a debt.
A budget can help in this process because it allows you to see how much you earn and where that money is going.
Finally, ensure you make the least payment that you can before the due date. It is better than leaving the numbers there untouched.
You may not be capable of repaying everything at once, so paying in instalments is a very good way out especially when you have a chunk load of money to pay off.
Make getting out of debt on of your most important goals of the year. Thank me later.
Hope this blog showed you how to get out of debt? You may also like to see these 6 surest ways to make money (and be independent).
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Maxwell is a Dietitian with passion for showing people hope. With nearly a decade experience helping people make key decisions on education and career, you can find him almost everywhere on this site. From answering admission and scholarship questions to creating tutorials and helping others live their best lives though nutrition. Connect with me on Twitter.