People get into debt every day. For someone new to the Western way of life, it looks almost like this world is wired in spirals of debt. An individual has, at all times, one form of debt or the other. The credit card, credit score, mortgagees, credit ratings, prequalification for loans, etc. all attest to the fact that we are expected to owe and keep owing. But it is equally possible to stay out of debt.
Getting out of debt requires a ton of introspection on how the debt came about and some discipline to get out of it. It is a life-changing process which starts from you and your choices. Debt is never fun! But before you begin the process, develop the mindset that:
- Getting into debt is easy – it’s a slippery slope!
- Debt is a temporary feature. You don’t have to live with it.
- It is possible to get out and stay out of debt.
- Accept responsibility. No one – not adverts, government, partner, institutions, etc. – got you into debt. You got yourself into it.
- Getting into debt is not so much a function of what you did but the habits you formed.
- Realize something needs to change and go all out to change it.
With the right mindset, here are some helpful tips to get you out of debt.
Make some lifestyle changes
‘Buy now pay later’ is your biggest enemy. It’s a bad habit trail which makes debt pile up! The implication is that you work to pay everybody but yourself. Be in a position to collect your salary, save, invest and spend it however you want. Don’t be anybody’s slave.
Budgeting and saving work!
It isn’t always fun but it works to have a budget. It is a way of telling your money where to go in advance. Budgeting helps you achieve your target savings plan. To have a budget that works, plan only on what is coming in as fund, that is, your real and not speculative income.
Determination, the right mindset and a disciplined lifestyle, will put you in the right path to stay out and away from debt.
Factor in all the costs and see if they go with your budget. Don’t be deceived. Anything that takes money out of you regularly is not an asset but a liability. Even your home could be a liability if care is not taken.
Track every penny
Find out where your money is going. To achieve this, try any of these – spend cash as much as possible; use a debit card; use a prepaid credit card. When you’re in debt, you shouldn’t continue digging.
Avoid minimum payment on your credit card bill
Don’t fall into the trap of paying the stipulated minimum. Rather, go into your account to check what you really have to pay to escape compounding interest. Compounding interest works against you which will be the case when you pay the minimum. It is better practice to pay above the minimum.
Have a side hustle for extra funds
No quick fixes on debt recovery. The money you make from your side business should be committed to getting out of debt.
Get friendly with cheaper or used items
This is especially true if you can’t afford the premium in cash or pay for new items. This may be an unpopular advice but remember that no one will give you money to finance your debt payment.
Finally, celebrate every milestone.
Celebrate your progress with your family and accountability partners if you have them. It keeps you on track when you do this and makes the recovery journey less painful.
Getting out of debt is not easy but it gets even tougher to stay out of it. However, determination, the right mindset and a disciplined lifestyle, will put you in the right path and help to you stay afloat. And it is achievable once you set your mind to it.
For an in-depth profiling of the topic, listen to Episode 49 of the Immigrant Life Podcast.