Having debt is difficult. I understand what it’s like to always worry about money since I’ve been there. But hold onto your hope! I’ve been able to pay off debt, and I think you can too.
I’ll outline the seven stages that I found to be effective in this blog. They aren’t simply book notions; they are actual techniques that I have employed and witnessed to be effective for others.
[1] You need to face your debt head-on
I know it’s scary, but you need to know exactly how much you owe. Gather all your bills and write down every debt you have. Include who you owe, how much, the interest rate, and what you pay each month. Debt management might be hard, but you’ll feel better once you know what you are dealing with.
[2] Next, make a budget
Budgets, which I once thought were tedious. But, they are essentially just financial plans. Your monthly income and expenses should be documented in writing. Add all of the expenses to see where your money is going. To keep track of everything, I think that using a spreadsheet or budgeting tool is beneficial.
[3] Now, look for ways to spend less
Although there are usually more ways to save than you might imagine, this can be difficult.
- Could you move to a less expensive phone plan?
- Increase your home cooking?
- Cancel infrequently used subscriptions?
You can use every paisa you save to settle your debt. Don’t be like me, or you might rethink your debt management plan.
[4] Next step is to try to expand sources of income
This is really important, but people often forget about it. There’s only so much you can cut from your spending, but there is no limit to how much more you can earn.
- Try for a raise at work
- Start a side hustle?
Small gains in your income can make a big difference when you use that money to pay off debt.
[5] It’s time to Opt your debt repayment methods
There are two main ways: the snowball method and the avalanche method. The snowball method means paying off your smallest debts first. This feels good because you see debts disappearing quickly. The avalanche method lets you pay highest interest rate loans first. I preferred the snowball method because it kept me motivated, but both ways can work for you.
[6] Go and talk to the people you owe money to
Many people skip this step, but it can really help. Ask if they can lower your interest rate or get rid of some fees. If you owe money for medical bills, ask about help programs or discounts for paying in cash. For credit card debt, you might be able to move your balance to a card with lower interest. Remember, they’d rather work with you than not get paid at all.
[7] Last step is to stay motivated and celebrate your progress
It takes time to pay off debt, so it’s critical to acknowledge your progress along the road. Establish modest objectives and discipline yourself when you meet them. Contemplating about how wonderful debt-free living will be is also beneficial. When you are no longer paying debt, what will you do? Remember this when times are hard.
To wrap up
Paying off debt requires dedication and patience. However, I can attest from personal experience that it feels incredible and is well worth the effort to be debt-free. You can take charge of your finances and live debt-free by implementing these seven steps. Recall that every little bit of money counts. I know you can do this!
