Photo Credit: DedebtDebt: The only thing we all fear. All people want financial freedom, but very few people achieve their goal. The mismanagement of money is the biggest problem, especially when it comes to debt: bad debts. For most people, debt is a way of life. The basic definition of debt is money borrowed by one person from another. According to this definition, the debt is never bad or good. But, there are two types of bad and good debts. Bad debt is money that can not be recovered. Good debt helps you earn money.
You can not live without a good debt because that is how you will get ahead. To be financially free, you must learn to pay your immaculate debts and stay free of them. Bad debt is money that you borrow and buy luxuries like clothes, cars, going on vacations, jewelry, etc.
To eliminate bad debt, there are two things you should do; limit your expenses and have a formula for paying the debt. Everyone has a formula to pay off the debt.
Below are six steps you can use.
Take notes; this may not apply to everyone. This is just the formula I used to pay my uncollectible debts.
PAY OFF YOUR DEBT FASTER TIP 1: STOP ACCUMULATING DEBTS:
The first step is to stop accumulating debts. When you notice that you’ve dug yourself in a hole, you stop digging..
You must limit your spending. This means being frugal. Most people think that frugality is a bad thing. But, if you want to get out of debt, you need to be economical. Take an inventory of your expenses and then try to eliminate the expenses that you can leave without them. Write down measures to tighten the belt that will save you money every month. Commit yourself to this process since your life depends on it.
Never buy on impulse. Buy on impulse is what makes people get into debt. You need to control your desires.
Delayed gratification. If you are looking for short-term gratification, you will pay in the long term. Never buy the luxuries with a credit, you will only be digging in debts.
PAY OFF YOUR DEBT FASTER TIP 1: TAKE YOUR DEBTS INTO ACCOUNT
You can not work on something you do not know. Therefore, you should consider your debts. This is the hardest part because you will have to be true to yourself. You also need to indicate the amount of money you owe. Be sure to write down how long it will take.
For example:
- Credit card debt amounting to $ 2,000 with a minimum payment of $ 200. That means it will take eight months to pay off the debt fully.
- Your school loan amounting to $ 3,000 with a minimum payment of $ 300. It will take you ten months to complete the payment
- You must list all debts, including those owed to your friends and family. They may not need a refund, but paying their friends will help develop self-discipline.
PAY OFF YOUR DEBT FASTER TIP 1: START PAYING YOUR DEBT
Once you have made your list, you should start paying off the debt with the least number of months. If you pay the debt, it will motivate you. Check your credit score and seeing how debt has eaten into you can help to motivate you to pay off.
PAY OFF YOUR DEBT FASTER TIP 1: GO TO THE NEXT DEBT
Take the next debt with the least number of months and pay. Here is the complicated part; Take the money from the first debt and add it to this new debt. For example, take the first $ 200 you were paying and add $ 300. In total, you will pay $ 500. This means that instead of taking ten months, your second loan will take six months instead of ten months.
PAY OFF YOUR DEBT FASTER TIP 1: FIND AN ALTERNATIVE REVENUE GENERATOR CHANNEL
It is important that you find an alternative source of income. It does not have to be something that consumes a lot of time. A part-time concert is perfect for you. The idea is to raise an extra amount of money, from $ 50 to $ 100. The extra money will be used to pay off your debt. It will help you pay off debt faster than you expected.
PAY OFF YOUR DEBT FASTER TIP 1: PAY
Most people do not pay for themselves, but by not doing so, they will not be motivated. It makes sense to pay your debts first. However, if you do not develop the discipline of paying yourself first, you will not be motivated to pay your debts. Motivated by asking? Yes. When you pay first, the pressure of paying your creditors will make you think of different solutions to pay them.
To pay yourself, you must start small. Take three piggy banks; one to save, invest and tithe then take 30% or the amount you feel comfortable with and put in the piggy banks, that is, 10% in the three banks. After each month, deposit the money in your savings account and investment account. The tithe money, give it to your favorite charity or church.
If it can not be paid first: pay off the debt that stresses it. Once it has stabilized, start paying yourself.
Paying yourself will help you develop self-discipline. Design your own formula.
PAY OFF YOUR DEBT FASTER TIP 1: FINAL WORDS
This is an example of what you can do to pay off your debt. If you do not feel comfortable with a bad debt, you should strive to pay it off. Frugality is fostered for the first few months. Reduce your expenses.
