Anyone, everyone can face a financial crises. This is usually caused by some unexpected event. It might be a crucial health issue, the loss of your job, victim of a scam or outright frugal spending. To cushion the effect of this crisis, one might decide to take a loan, or more. Hopefully payback should be easy; but most time it isn’t. Research shows that more than almost 60% of individuals take loans to manage a crisis and then go on to take more loans to offset an existing loan. This eventually causes a huge chasm in your wallet. so it seems at some point that you’re just working till payday to settle a loan with very little to nothing for yourself.
How can you get out of the debt pit?
1. Make a list of how much you owe.
Now, you know you debt, yes. You also know it’s take a whole lot of time to pay these off, true. But how much do you really owe. Have a list of all the money you have to pay back. From the medical loan, to your bank overdraft to the few bucks you owe a friend put it all on paper. It’d be a lot easier to know how deep in debt you really are when you’ve got a list of debts, payback dates and accruing interest.
2. Analyze where your money goes and Cut back.
Make conscious effort to keep track of your finances You could draw up a simple finance tracker (good news is: this isn’t so simple) . Indicate how much you spend on food, transportation, gas and other necessities. Also indicate money you spend just to feel a little bit more comfortable and may be avoided say going to the cinema less times in a month, eating out less often or trying to reduce the electric bill by a fraction with minimised ‘standby power' modes and air conditioning. The entire aim of this is to cut back as much as possible so as to avoid running into more debt. This might seem like an enormous task but it’s possible; and it’s gets easier as there are many mobile apps that could take the work off your brains and give you excellent results.
3. Set a goal.
Make sure to set a goal concerning what you’re owing. You could set an estimated debt free date. This should be something realistic and achievable. You could set a goal to pay back a particular amount of your debt at some set time to avoid crippling interest and loan extension fees.Having a goal and sticking to it will help clear your debts way sooner than you think.
4. Scout for discounts and bonus offers.
You’re trying to live within your means and save as much as you can to clear up your debts. There might be available discounts offered at your preferred grocery store, bank or internet service provider and saving up a tiny percentage here and there would definitely mean a lot at the end of the day. Scout for promo codes, coupons and cashback offers. You could also bargain for better deals when possible. This alone could save you up to 30% off the price of a product. This means a few more bucks in your pocket that could help you pay for other necessities.
5. Get a side Hustle.
Your day job earnings alone might not be able to manage your debts and still run your upkeep. You could get a side hustle. Have you got any skills you could monetize? Could you work as a freelancer? Could you make extra money with your car as a bolt driver? Can you babysit, clean or do a few other things for some extra change? Money you get from this can help you keep alive, especially if what you’ve got is a pay day loan. A word of caution though; in trying to extra cash stay calm and do not engage in shady business or go the extreme as this my cost you a whole lot more than what you’d make.
6. Liquidate some of your assets.
Are there items that are no longer useful to you? Could you put them up for sale? You could check out declutter sites or stores and sell that carpet rolled up in your basement for a great price. (Again do not go about putting up your useful properties for sale .You might end up destitute, even selling your kidneys.)
7. Save.
You’re recovering from a crisis doesn’t mean you’ll never have rainy days. Try to save sometimes occasionally, no matter how little. This way you’ll have emergency funds available when need for it arises. Also, should rainy days come again, you’ve got an umbrella or at least a cap to start with.
8. Stay on track with reminders.
Constantly remind yourself of your goals, review your budget and probably set a reminder for a payment due date so you would not incur more interest.
It might take a little While but it always eventually stops raining. You’re doing well already. You can do better. With self-control and a little hard work you’d soon be debt free.
© Aloso Michael
Reviewed by Finance Matters
on
July 01, 2022
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