Who else doesn’t want to live financially fee lifestyle? Of course, everyone does. Financial freedom is more than having a lot of money. It’s about achievements in life, giving all the happiness to your near and dear ones, traveling the places you have always dreamed of and living life the way you want. But, nothing in life worth having comes easy and financial independence is no exception. It is a series of steps that you need to follow and paying off your debts is the first big step you need to take. If you are experiencing the weight of debt on your shoulders, you need to get out of it first. Here are 11 crucial steps that can help you pay off your debt:
Figure out how much money is to be paid back
- 1 Figure out how much money is to be paid back
- 2 Arrange debt in ascending order
- 3 Do the same with interest rates
- 4 Know how much cash is available
- 5 Control your spending:
- 6 Something for everyone
- 7 Find easy ways to pay
- 8 Take care of daily expenses
- 9 Spend on what you need:
- 10 Spend bonus earnings on debts
- 11 Find ways to generate extra money
Take out your credit card bills, electricity, and telephone bills, make a list of people with amounts you have to pay and ultimately, you need to figure out how much debt you are in. Finding the exact or the closest amount you need to pay is essential so that you can take further steps or actions accordingly. Moreover, you will be able to know about the priorities about whom you need to pay first. Note things down and prepare a list so that you can prepare yourself for next steps.
Arrange debt in ascending order
The second stage of the process is a bit interesting and can help you in more than just a few ways. Once you have the list of payments you need to make, arrange them in ascending order and understand the reason behind doing this activity. Once you know about the lowest payment you need to make, pay it first. Reason being, you will gain the much-needed confidence that yes, you can pay at least one-by-one. The feeling of paying the even the lowest debt is surely going to boost your willingness to earn more and clear all as soon as you can.
Do the same with interest rates
Have you occupied any personal loan? Or any home loan or vehicle loan is digging a big hole in your pocket? It’s time to find the cause of why you are finding yourself unable to pay debts on time. What you did with the payments you need to make in the earlier stage, repeat it with the interest rates. You can analyze the current financial picture. Paying interest for a long period is never a smart decision till you have that financial freedom. So, repeat the step for interest rates and start paying from the lowest one.
Know how much cash is available
To know how much cash is available is the smartest move to make. Understand your own financial picture in a better way from the very beginning. This step is no less than planning in advance that where your hard earned money will be spent. So, you know all your sources of income and everyone can find an approximate amount or even the exact one that you are sure to get in specific period. Such planning in advance is sure to provide you with the mental satisfaction and also, the idea about how much debt you can clear in upcoming days.
Control your spending:
Have you ever given a thought on noting down how much have you spent in a month or a week? If not, then start doing it from today. Once you have an idea about your spending, you can find some ways where you can cut down your expenses and save some money to pay off your debt. Of course, you must be finding these steps very small, but remember, these small steps are sure to make a big difference, and you will soon find yourself in a situation where you will have no one asking for money.
Something for everyone
Something here means money! When you find yourself surrounded with so many people asking for money, it can prove to be a problematic situation. This is where paying something to everyone is something that makes absolute sense. Pay in smaller amounts to everyone so that you can find ways out.
Find easy ways to pay
Yes, this can save a great deal of your money if you are aware of some of the easiest and cost-effective ways to make your payments. Use the best possible methods of transferring money to different accounts instead of visiting on your own to the people you need to pay.
Take care of daily expenses
You need to realize the fact that most of your daily expenses can be reduced to a great extent. You can switch off the lights when you don’t need them, make calls to people only when you need to talk to; you will save at least something by the end of the month that you can store to pay your debts. So, find ways you can save money with your daily activities.
Spend on what you need:
Buying something just because you want to buy it is never a good decision when you are in debt. Make sure you spend on only those things that you need, don’t waste your cash on things you don’t need. There is no rocket science in it.
Spend bonus earnings on debts
Sometimes you may find yourself in luck! Earnings that are unexpected can reduce the load. Earning from inheritance or some monetary gifts can be directly spent in clearing your debt. This is how you can get burden away from your shoulders and enjoy your time with loved ones.
Find ways to generate extra money
You need keep looking for ways by which you can generate more cash. Don’t limit yourself to your salary that you get every month or the income from your business that you generate. Keep looking for new ways to make passive income and once you follow these crucial steps in a better way, you will surely find yourself in a relaxing and financially free state.
Byron Simpson is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance cent.