This is a very good time to consider becoming Debt-free as is common to this season of the year, creditors are everywhere trying to cross names off their debtors’ lists. For the creditor, it’s a yayy moment because they get to have their money back – with/without interest – but for the debtor who is in great financial debt, is it really a fun time?
It is, without doubt, apparent that no one walks into debt without a cause, and unfortunately, with the spate of inflation currently ravaging the country, taking on debts is almost an inevitable option for a large number of us struggling at this moment.
If you already are in debt, don’t beat yourself up. YPFG totally understands. This is why we’re here to help you get out of it with these tips to set you on the path to becoming debt-free:
- MAKE THE MOST OF EVERY KOBO
- ALIGN YOUR SPENDING AND VALUES
- KNOW YOUR ‘WHY’:
- WORK SOME SIDE HUSTLES
MAKE THE MOST OF EVERY KOBO:
Building a budget is key to any financial plan, but especially so when you’re paying off debt.
YPFG recommends the 50/30/20 budget: Keep essential expenses, like housing, feeding, and transportation, to 50% of your income. Then allocate 30% for savings and your debt pay-down and use 20% for your wants. Since you’re focused on paying off your debt, you may decide to use money from your wants category to make extra debt payments. That will wipe out debt faster and help you save on interest and in turn make you debt-free.
Once you have your budget, track your progress. You can set yourself up for success by automating as much as possible. You can always revise your budget as necessary.
2. ALIGN YOUR SPENDING AND VALUES:
Avoid falling into the big-spender territory by heeding signs of overspending. If you find yourself falling behind on savings goals, buying items out of boredom, and breaking your own spending rules, you might be overspending.
If you are already in that territory, don’t worry. You can break the cycle by building a good budget, analyzing your bank statements, and working to build new habits, like cooking at home instead of eating out.
3. KNOW YOUR ‘WHY’:
Think about your financial goals in the near and long term. Whether you’re looking for a new house or saving up for a vacation, having a clear motivation to get out of debt will help keep you on track.
4. WORK SOME SIDE HUSTLES:
Could a side business give you extra income to pay off debt? Consider any skills you have, such as web design or coding, that you can offer to earn extra cash.
If taking a side job sounds exhausting, make it a short-term stint to earn enough for a few extra payments toward debt.
It may look like your debt is not reducing because of the little amount you put toward clearing it each month, but don’t worry; it is. Remember, the only way to beat debt is by throwing everything you can at it—until it’s gone! You can be debt-free this year.
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