Getting rid of debt and staying out of it can be quite a daunting task, especially if you have piles of loans to pay one. One loan often leads to another and the loan amount keeps increasing. People often live under the misconception that availing another debt to pay off a pending on is an easy way out but that’s not the case. Read on to find some useful tips on how to get rid of debt on your own.
Don’t increase your debt
If you know you’ve borrowed more than you can pay back at one shot, cut down on your expenses . The most common form of debt these days is credit card usage. Don’t apply for an additional card just to pay off your dues on an existing credit card. Sooner or later, you will have to pay off your debts on both cards and this can be quite troublesome.
Keep a Record of Your Spending And Categorize them
Keeping a record of your spending and categorizing them helps you keep a track on unnecessary spending. You should categorize your purchases in groups like “must haves”, “like to have” and “should have”. This gives you a clear idea of the things you don’t really need. The saved money can be spent on paying off debts.
Stick To A Fixed Budget Each Month
Make a budget according to your spending each month and then stick to this budget. Try not to use extra money and if possible save money from your monthly budget too. This can help you pay off debts faster. If monthly budgets don’t work well for you, you can also plan a weekly budget, assigning a minimum some of money each week for spending.
Maintain A Record of How Much You Owe And To Whom
It’s always important to keep a record of your debts. Write down how much money you owe and to whom. This gives you an idea of how much money you require to pay off to your lenders each month. Also, be aware of the terms and conditions of your debts. You wouldn’t want to be slammed with a late payment or over limit fee.
Pay off A Little Of Your Debt Each month
Don’t leave payments for the next month. If you have the money, pay off your dues immediately. One great trick on how to get rid of debt is paying off your smallest bill in full and the minimum amount on bigger bills each month. This means you start from the bottom and soon have all your bills paid. A common mistake most people make is that they tend to pay off the minimum payment each month even if they have enough money to pay the bill off in full. They use the extra cash to make “unnecessary” purchases. SO if you have the money, pay off all the bills you can completely.
Use Cash Rather Than Cards For Your Purchases
There’s a psychological explanation for this. When you pay for your purchases in cash rather than with a card, you tend to spend less. This is because with plastic you don’t see the cash coming out of your pocket and hence don’t feel bad to overspend.
These are a few tips on how to get rid of debt without borrowing more. Following these simple guidelines can help you pay off your loans and lead a stress free life.