Few Hacks to Get Out of Debt
Stuck in debt is really stressful! You cannot think straight on which to pay first, and kinda lost somewhere.
Here are few life hacks to get out of the situation:
> STOP BORROWING MONEY – This should mean stop buying items using credit cards or loans. This will help you focus solely on the debt that you currently have so that you can develop a game plan to pay it off quickly.
> WORK ON YOUR EMERGENCY FUND – You might be asking yourself why have an emergency fund? This emergency fund can become your source for emergencies while paying off current debts. This serves as a buffer between you and debt.
> CREATE AN ATTAINABLE BUDGET AND WORK ON IT - Developing a budget that tracks your income and your expenses is crucial to getting out of debt in a short period of time. It will help you gauge where you are with your finances so that you can move forward toward your goal. It will expose whether you have money left over, which is called a surplus, or if you are in the negative, which is called a deficit. The goal is to increase your extra fund and use that money to pay down your debt. There are two ways that you can do this. First, you need to earn some extra cash, this may mean that you need to work extra hours or look for additional part time job. Second, is to cut down on your expenses. Review all your expenses and assess which of your expense you can reduce or cut-down. You may need to get used to letting go of few luxuries you are used to.
> SET UP YOUR BUDGET – This is predominant in determining a plan to pay off your debt. There are two ways that are worth considering. First is where you list your debts smallest to largest regardless of the interest rate. Second is called “laddering”. This is where you list your debts, starting with the highest interest rate card first and end with the debt with the lowest interest rate. This method makes the most mathematical sense, because you will save the most money in interest over time. Regardless of which process you choose, the key is to stick with it.
> PITCH ANY EXCESS MONEY AT YOUR DEBT – If we are getting out of debt, we have some extra funds thrown into our laps that we may not considered into our debt elimination in the first place. We may decide to take this funds out and pay off debt. Such examples are tax refund, inheritance, sold items/car/house, etc.
Being caught in debt should not be an agony for the rest of your life. It is just a matter of developing your financial skills to start your life being debt-free.