Five ways you can get rid of personal debt

While borrowing money can seem convenient and easy when you need it, paying it back can be hard especially when you are poor at managing your finances. Like most debts which often start off innocent, over time they can accumulate into huge chunks of money that can drive you straight into a financial pit.

In case you are wondering how you can start paying off your debt and starting on a clean slate, here are some ways that can help you clear off personal debt:

Create a budget and stick to it

This is the number one mistake most people make, living one day at a time without a plan or budget. When it comes to managing your finances, you have no option but to work with a budget. It is the only way you can keep your spending habit on check and prevent your debt from ballooning further. 

A budget will also help you know what you need to prioritize and help you keep track of your spending. Furthermore, when you are able to track your spending you can easily figure out your shopping weaknesses and how to curb them.

Pay off bigger debts first

You will notice people will pay off their debts with the money that remains after making a monthly budget, when in the real case you should first make your monthly payments before making any other plan. 

List down all your debts so you know what you are working with and how much you need, then prioritize the debts and start with the ones that have the highest paying interests, which are most probably the largest amount you owe someone or a bank. Some experts suggest paying off small debts completely so that they can motivate you to clear your debts faster.

Avoid taking new loans

The point of paying off a debt, is to end the vicious circle of constantly being in debt. Once you start paying your off your debts, the worst mistake you can do is thinking you can afford to take another loan. 

Sometimes you might feel the urge to take a loan from a softer person to pay off a nagging loan shark or street lender, it might work but you will still be in debt at the end of the day. Instead learn to practice financial discipline, plan yourself well and stick to your budget.

Earn some extra cash

Whether you decide to take a second job, work online or join a small business that can bring in a constant flow of cash, some extra cash would be useful to you when trying to get rid of a debt. 

Instead of having to use your money to cater for the basic daily expenses, you can use your extra cash to make these smaller payments while the larger amounts is used to pay off your debts and other larger payments. If possible, channel more money than you should in order to finish paying your debt faster.

Learn to say no

Once you are ready to start paying off your debt, identify all your weak links and find a way to keep them in check. For instance, if your friends constantly invite you to places you cannot afford, learn to say no. You might ruin your relationship with them but you will be one step ahead in managing your finances. 

Furthermore, you can avoid things that will tempt you to use money carelessly, like visiting malls or eating out. You may not realize it but you actually spend more money monthly than you should without a budget.

Have an escape plan

Last but not least have a way out. Just like a drug addiction, taking loans and relapsing on your payments can become a lifelong problem you have to deal with. When getting rid of debt in your life, you should already have in mind what your next financial goals are and how you plan on working towards it. 

Paying a debt requires some level of discipline and once you have hacked that, you can harness that into saving money for your projects and plans  instead of taking loans.