This guest post was written by Yousef Zatari a longtime reader who is going to talk about actions to take to get out of debt and stay debt free. Enjoy.
Being in debt is something that no one wishes to be in. However, due to certain circumstances, we sometimes are left with no other choice but to borrow money from others. Also, with the fact that we need to pay for our everyday living expenses too, we are left in debt for a long time to the point that we think that our situation is helpless. Nevertheless, this does not necessarily mean that there is no way out for you. So, to provide you some help, we have listed down some actions that you can take towards financial freedom.
List all of your debt
No matter how much you want to forget all of your debts and no matter how much you don’t want to see your bills, you need face reality and accept it. So, start listing all of your debts and then arrange them in accordance to their interest rate, from the highest to the smallest one. Then, pay the debts on the top of your list since they are the ones that costs you more. Once you have paid them off, it would be much easier for you to pay the rest of your debt.
Create a budget
Do you even have any idea on how much money you are spending daily, weekly, monthly and yearly? Perhaps, you have been spending more than what you earn, leaving you in more debt. In this case, it would be best for you to create a budget. Creating a budget is not actually about limiting yourself regarding the things that you can buy but it is actually about spending your money wisely. So, grab a piece of paper create a budget for your everyday living expenses. Just make sure that your budget does not exceed your income and that you would have some money left to pay off your debts.
Monitor and adjust
Just because you have already set a budget doesn’t mean that you can get too comfortable. Of course, you still need to monitor your progress and make some adjustments as you see fit. If you have seen that your credit score has improved, then it only means that you are going towards the right direction but if it still remains the same without any progress, then you might need to exert more effort in minimizing your spending. Of course, it would not be easy at first but you would soon get used to it.
What is the most important thing for you? Is it your home? Your car? If you fail to pay for your mortgage, then you are more likely to lose your home and for sure, you don’t want to end up in the streets, right? So, make sure to pay your mortgage first before anything else. Prioritize the things that you cannot afford to lose.
Sell some of your stuff
Are there items in your wardrobe or in your house that you are no longer using? Do you think that someone would still be willing to buy it from you? If your answer to these questions is yes, then go and sell some of your stuff. Nowadays, there are a lot of online selling platforms that you can use. By doing so, not only can you free up some space in your home and earn money but you are also helping other people acquire something that will be of great use for them at a cheaper price.
Be wise with your buying decisions
Only buy the things that you need and can afford. Instead of buying something that you don’t even need in the first place and something that you would only be using once, why not use that money to pay your debt instead? Also, when it comes to buying things like sandals, choose ones that are of high quality so that just one pair would be enough for you as it would last for years. You also get to save money by doing so. Be a wise buyer.
Get the bills and the payments that you have made from the previous years and then determine if you have paid for something unnecessary. For example, have you shopped for too many clothes? Did you spent a lot of money from eating at restaurants? Have you attended a lot of concerts? Downsize. Instead of eating at fancy restaurants, why not consider cooking your own meals instead? Find ways to reduce your costs. Nevertheless, these are all temporarily and just think that after all these, you can start enjoying a debt free life – a life where you no longer need to worry you can get the money to pay off your debts.
Avoid bringing your credit card with you
There is a need for you to know that a lot of people have more spending and have acquired more debt whenever they make a purchase using their credit card instead of paying with cash. So, it is suggested for you to avoid bringing your credit card with you whenever you leave your home, especially if your purpose for leaving your home is to shop for some items. Only bring enough cash to buy the items that you are planning to buy to avoid overspending.
Increase your income
If your current income is only enough to pay for your everyday living expenses, then there is a need for you to find out ways to increase your income. For example, you can consider looking for a part-time job that you can do during your day-offs so that you can remain productive and earn more money to pay your debt earlier than planned. Nowadays, you can even work from home.
In order for you to have a life that is free from debt, having a plan would not be enough. You need to take an action in it. With these tips above, you are sure to attain financial freedom one day. So, start working on it today!
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