One of the nasty little things to have in life is debt. If you’re reading this, you probably made the choice to finally deal with your debts and dig yourself out of that dark hole. For making that choice, congratulations! You’re now a step closer to becoming debt-free.
In this blog post, I’m sharing with you simple money management tips on how to get out of debt.
Pay off your most expensive debt
Make a list of all your debts. Arrange them according to the most expensive debt. From here, you can see which debts you should prioritize. Start by paying off your most expensive debt.
Why? The most expensive debt has the highest interest rate. What you save in interest can go towards your future deposits.
Stop taking on more debts
To get out of debt, it’s important that you stop taking on more debts. You can cut up all your credit cards or impose a strict limit on yourself.
Sell unwanted items
Raise more funds to help pay off your debt by selling things that don’t spark joy anymore. This includes shoes, furniture, books, clothes and many more.
Every cent counts so make the effort to sell things you no longer use. Then, use the cash to pay your debts.
Calculate both incoming and outgoing amounts
Check your budget and see how much money is coming in and going out. One way to do this is by listing all your expenses. Then, check where you’re wasting most of your money and make some cuts. Doing this can save you extra money that you can use to pay off your debt.
Increase your sources of income
If you’re having a hard time paying off debt, you can start a side hustle or learn how to start earning passive income. Then, use all the income you get from that second job to pay off your debt. There are a lot of jobs you can do during your free time.
Live below your means
Scale down your lifestyle and avoid spending more than the amount of money you make. Doing so will help you allocate more money to paying off your debt.
But once you’ve paid your debt, continue with this lifestyle and soon you’ll have saved enough money that you don’t need to borrow money from other people or use your credit card ever again.
Celebrate small wins
For every debt you’ve paid, celebrate and reward yourself for your achievements. It will help you to stay motivated in paying off your debts. Soon enough, you’ll find that you’ve already paid all your debts.
Commit to using cash
Compared to swiping cards, using cash makes you more accountable. You’re also less likely to make any impulse purchases and buy only what you need since you have a limited amount of cash in your wallet.
Build an emergency fund
Once you’ve settled all of your debt, channel your money to building an emergency fund. A three to six month’s worth of income should be enough. Doing this will help you stay debt-free when you’re suddenly in need of money.