Photo: Unsplash Katie Harp
Rock bottom is a difficult place to be, but the good news is, you can climb out, no matter how deep you’ve managed to burrow. It’s a steep climb, and it requires a mindset overhaul, but it’s 100% doable. You have to start seeing debt as a natural consequence of certain actions. To help you permanently rid yourself of its burden, follow this simple 4-step guide:
- Seek Guidance
There are people in this world so skilled at managing money that they earn their living teaching others how to get out of debt. They will be able to examine your income and weigh it against your expenses to find the best flow for your finances. They can also help you reach agreements with the entities you owe money to, and prevent avoidable interest from accumulating on your existing debt. If you’re struggling with debt, your most important first step is to seek professional guidance.
- Stop Procrastinating
Sometimes, just the knowledge that you need to take drastic action is terrifying. This fear is absolutely valid. However, procrastinating can exacerbate the issue. Often, we instinctively wait for a crisis before seeking help. This is natural – after all, discussing a financial challenge you are facing is difficult. However, struggling on your own and juggling mounting payments month after month can be disastrous. For example, if you accumulate late penalties for unpaid bills, you could end up stuck with more debt. As you go further into the red, it becomes more challenging to get you back into the green. So, get help sooner rather than later.
- Consolidate Your Debt
When you owe a number of people money, it’s difficult to manage your payments. You may have several people chasing you with the risk of late payment penalties and added interest always looming over your head. By consolidating your debt, you allow one company (usually a bank) to settle all of your debts on your behalf. This means you only need to pay that one entity each month. This makes repayments easier. It also means you are able to come up with terms that better suit your lifestyle. For example, you could spread your payments out over a greater number of months, making your monthly contribution lower and more manageable.
- Cash Is King
It’s not always possible to live 100% debt-free, but you can get close. The “cash is king” mindset doesn’t mean having to pay for every purchase with real money – you can still swipe your cards. It means you need to change your mindset about spending in general. If you can’t purchase something within a single month’s salary, you need to save up for it (with the exception of things like purchasing a property). “Cash is king” thinking applies to purchases that don’t represent an investment. For such items, you should avoid taking out loans and throwing them on your credit card without thought.
- Get Visual
Think of debt as a stream of cash leaving your bank account. The more sources of debt you have, the more streams there are draining your bank account. It doesn’t matter if each one is only a trickle, they can quickly add up to become a great roaring river if you’re not careful. Keep this vision in mind every time you’re tempted to use your credit card.
If you are trying to claw your way back into the green, avoid new debt at all costs. Follow the tips above, focus on putting as much money as possible into your repayments, and you’ll be debt-free sooner than you might imagine.
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