Do you ever feel anxious and stressed out about having too much debt? Debt can be emotionally draining and frustrating. But, it’s not impossible to get out of debt on your own.
Start by making a conscious decision that you want to become debt-free.
Choose to start right now.
1. Where do you stand financially?
The first step is to accept that you want to get out of debt. Making a conscious decision to get out of debt will motivate you to act.
Start by listing all your debt. That includes home loans, car loans, credit cards, student loan etc.
Although that amount represents everything that you owe, don’t be discouraged. We’ll break it down into smaller bite-size chunks later.
Knowing how much debt you have will give you some perspective on where you stand financially. So that you can plan your way out of debt.
2. Get out of debt by changing your behaviour
It’s easy for us to blame our salaries when we’re struggling to get out of debt. But, most of the time, it’s our behaviour. No matter how big your income is, if you spend more than you make, you’ll shake hands with the debt monster.
You have to change your behaviour.
- Did you fall into a huge pile of debt after losing your job? You can resolve this by starting an emergency fund, once you are debt-free. An emergency fund can help you in tough times, like unemployment.
- Are using your credit card to buy daily goods? Avoid using your credit card as much as possible.
- If you’re spending more than you can afford, start figuring out what you can afford. Try to live within your means.
To be honest, most of us live a life we can’t afford. This is why budgeting becomes so important. Budgeting helps you understand where your money is going, and where you should cut back.
So, take advantage of a good budgeting plan. It will help you cut down on spending so that you can push more money towards your debt.
Because we’ve become accustomed to our spending habits, changing your behaviour can be difficult. But, that’s what it takes to be debt-free.
If you want to get out of debt, you have to change the way you look at money and start developing healthy spending habits.
3. It takes dedication to get out of debt
If you’ve tried cutting back on your spending but can’t free up enough money to pay off your debt. You may want to think about alternative ways to make extra cash. After all, you’ll need money to get out out of debt.
This will be difficult, but it’s not impossible.
Try to find something that you can do in your spare time. Maybe you have a garage filled with old stuff that you can sell. Or you have skills that you can put to good use.
There are endless opportunities out there that will help you make extra cash. It’s up to you to find something that works with your situation.
According to David Weliver earning more, generally, falls into 1 of 3 categories.
If you are lucky enough to have a bunch of things to sell. But this approach is not sustainable. Eventually, you’ll run out of things to sell.
You can get a second job or work overtime, if possible. Neither of these options will be fun, but they will help pay the bills. Both of these will be difficult to maintain. But it is not impossible.
Working smarter means getting a promotion at work. If you don’t get a promotion, try to find a higher-paying job elsewhere or an alternative is to work for yourself.
The good thing is you’ve got options. You have to assess your situation and decide what best works for you.
4. Plan your exit strategy
If you want to get out of debt you’ll need a plan and you’ll have to stick to it. Your plan doesn’t have to be complicated. Keeping it simple, sometimes has the best results.
There are a few strategies that you could use when trying to get out of debt.
We recommend using the Debt Avalanche Method. This is a very simple and effective strategy. It focuses on eliminating debt by looking at the interest rate.
List your debt from the highest interest rate to the lowest. Calculate what you can pay towards the first debt account on your list. Remember, you want to pay more than the minimum repayment.
Once that account is done move on the next debt account in line.
Don’t change your repayment amount. The further down you move on the list, the bigger your repayment will become and the faster you’ll get out of debt.
5. Do you need debt counselling?
If you can’t afford your monthly necessities because of debt, you’re in a very serious situation and you should act as soon as possible.
Sometimes our financial situation is too overwhelming, and we struggle to get out of debt. Debt counselling will help you deal with your debt in a structured and legal way.
One of the biggest benefits of debt counselling is that you get out of debt, by legally reducing your monthly instalments. Your debt counsellor, like Debt Rescue, will renegotiate a new repayment structure with your creditors.
You will be put on a strict budgeting plan. You can use this budgeting plan even when you’ve completed the debt counselling process.
Debt Rescue is one of the biggest debt counselling companies in South Africa, helping more than 30 000 people become debt-free.
6. It’s your time to shine
You’ve done your research. You know what needs to be done. Now, it’s time for you to act and become debt-free.
You know that getting yourself out of debt will take time. Decide what you want to do today and start taking the first steps to a better financial future.
If you’re struggling to get out of debt while paying for living expenses, you may be over-indebted. Call us today or fill out our free online assessment to find out if you need financial assistance.