“I am debt free!” This is a line many dream of yelling out, however, becoming debt free is not easy. Still, don’t lose hope, it is possible. Having debt strains you and your finances. It keeps you up at night and it keeps you away from your favourite restaurants.
From today onwards, set a target for yourself – in 24 months, you will get rid of your debt. Having no debt is like starting fresh financially. You don’t have to deal with those credit card bills, notices and collection agencies.
So, what can you do that will let you off from your remaining debt in 2 years.
Make a Budget
– Track your Expenses
The first step is to start tracking your expenses. Make this a habit, so whenever you make a purchase, you can note it down. With smartphones, tracking your expenses is easy, just download an app. By the end of the month, you should know how much you are spending and where.
– Calculate your Income
Don’t just note down your income from the salaries, but any investments and earnings you are getting through property and shares.
These two parts constitute of your budget. Identify expenses that you can cut down on. Maybe you go on too many shopping sprees or visits to club, you need to reduce them. Look at your income and see how it can be increased.
The aim is to free up more money so you can pay the debts.
Rein in the Credit Cards
Don’t be dependent on your credit cards. You are using money which you don’t have and paying it back with interest. Use your credit cards wisely. Additionally, wherever possible start paying with cash, especially when you visit the grocery store and go out for a meal.
Get better Interest Rates
The target is two years, so you have time. Keep pushing your creditors to give better interest rates. Lower interest rates equal to a smaller debt. Having a high credit score, paying the debt on time and having a stable financial situation will put you in a better situation. Also, watch the market and be alert for points where you can push for better interest rates.
Start telling everyone that you are trying to become debt free. No doubt, a few friends will have a good laugh, but the kind of support that pours in will surprise you. They will work as constant reminders of what you are trying to achieve and keep your spirits up.
Review your Finances
Every three months review your budget. There is no point of planning a budget if you are not able to stick with it. Don’t allow excess money to slip through the cracks and don’t allow luxurious spendings take a toll on your finance.
In six months, take a look at your credit report. Take stock of your debt and ensure you are getting closer to paying off your debts.
If there is a problem with paying off your debts, a review of your budget and credit report will tell you.
Meet a Debt Consultant
If you are one year down the line and still not closer to paying your debts off, then you need professional help. A debt consultant will take stock of your situation and suggest the best ways to get rid of the debt.
Becoming debt free is difficult. It will test your patience, but if you harden your determination for it, you can do it. Best of luck!