Being in debt has inadvertently become commonplace for many individuals. However, it’s worthwhile noting that with a dedicated mindset, patient temperament and unwavering determination, one can certainly break free from the shackles of debt. Here are six actionable steps to embark on the journey towards financial freedom.
1. CATEGORIZE YOUR DEBTS:
Face your financial reality; acknowledge your indebtedness. Begin by itemizing all your financial obligations, which could include credit card balances, auto loans, and personal loans. This exercise gives you a clear picture of what you owe and to whom, allowing you to prioritize your debts from the smallest to the largest.
2. CONSTRUCT A FINANCIAL PLAN:
With your debts outlined, it’s time to build your budget. Start by noting down your sources of income and your regular and occasional expenses. Numerous digital tools and applications can help you with this process, providing an easy-to-use platform where you can input your figures and generate a comprehensive budget. This budget serves as a mirror, reflecting how you handle your finances and indicating if you’ve been spending more than you earn.
3. ELIMINATE SUPERFLUOUS EXPENSES:
If you are living paycheck to paycheck or saving very little, it’s an indication that you need to trim your lifestyle-related expenses. Minimize frequent eat-outs to perhaps once per week, or restrict shopping to essential items only and swap high-end stores for discount outlets. Entertainment expenses and hefty mobile phone plans are also worth evaluating for cost-cutting potential.
4. ESTABLISH A DEBT PAYOFF STRATEGY:
To pave your way out of debt, you need to design a suitable debt reduction strategy. Many finance gurus suggest tackling the smallest debt first. Apply any extra cash influx or savings obtained from reducing expenses towards this liability. Once paid off, implement a ‘debt-snowball’ technique where the money dedicated to the first debt is then allocated towards the second, making the payment size larger.
5. SET UP AUTOMATIC DEBT PAYMENTS:
To avoid the temptation of misusing money reserved for debt payment, consider automating your payments. Many providers offer a convenient online payment setup, allowing you to schedule automatic drafts directly from your bank accounts. Routine payments can be scheduled on a weekly, bi-weekly or monthly basis.
6. BUILD A SUPPORT NETWORK:
Intrinsic motivation is key to achieving your financial goals, and a strong support system can provide just that. Connect with relatives or friends also striving to become debt-free and empower each other. Draw insights from finance-related books and follow online blogs for tips about reaching your debt-free targets. If unpredicted costs arise, online cash advances from providers like CashNetUSA could be a viable temporary solution.
Adhering to these six steps will steer you towards a destitute-free lifestyle. Adopt them today to gain control over your financial future.
