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The better things in life are often alluring. It may start slowly, perhaps by taking an uber every morning or going out with friends every weekend. Debt may grow fast, thanks to that vacation or even that fancy car you just got on loan. Maybe sometimes it's unavoidable like a loved one got sick or a pandemic just hit. Whatever it is, debt is a growing issue in the country that if not looked into, may cause a decrease in mental health and affect the quality of your life.

Having debt is a heavy burden that can make you feel like there’s no hope or way out. The longer you continue to foster debt, the more expensive it gets due to the increased interest accrued.  Do not let your debts get in the way of achieving your dreams.

The good news is that there are steps one can take to get rid of debt entirely, no matter how much one owes. These steps need discipline no matter hard it gets.   If you have unending bills, you can take these steps to get rid of debt and take control of your finances.

 

1.      Accept your situation

 

The most critical step in controlling your debt is determining how much you owe. Sure, it is scary to calculate the amount you owe, but unless you come to terms with the exact amount, you will not make any progress.

 You can do this by creating a list of the people you owe, no matter how small the amount is. Write down the interest accrued on the loans and the minimum amount that can be paid monthly. Ensure that you go through the list countless times until you have ensured that you haven’t left out any creditors.

Debt is nothing to be ashamed of, so long as you are willing to make progress and eliminate it.

2.      Create a plan

 

Once you have the list of creditors, you can decide to take up the two standard options of debt management: Debt avalanche or debt snowball.

Debt avalanche includes starting to pay off the debts with the highest percentage of interest until it has been completely paid off while you make the minimum amounts of payment on the other loans. Once you are done with the first debt, move on to the following loan until you have completed the loan.

This method may save you money as you pay off loans with high-interest rates first.

Debt snowball, on the other hand, means paying off all your small debts and then working your way up to the more significant debts.  As soon as your smaller loans are paid off completely, you can take that amount of money and redirect it to the bigger loans until you have completed the repayment of all the loans.

It is an excellent method to use as it boosts morale as you get to see the visible progress of your debts clearing up.

Note that both methods are correct, so whichever you choose, ensure that you follow through. 

 

3.      Create a budget

 

The most significant step to completely get rid of debt is to create a budget. This helps you avoid more debt from overspending and also helps you clear existing debt. You might think a budget is only valuable for those with a stable income, but you’re mistaken.

Make a list of all your expenses, big or small. Categorize these expenses into wants and needs. The needs are the basic things that you need to survive, such as food and shelter, whereas wants are things that you need to make your life more comfortable such as a nice car.

Remember, getting rid of debt requires sacrifice, so hold off on going to that fancy restaurant for a bit till you can have a hold of your debt. On your budget, ensure that anything that isn’t necessary is taken off the list; remember, it's only for a while, so be patient and remain consistent.

Also, always remember to allocate your debt to your budget.

4.      Consolidate your debt or reach out to the people you owe

 

Sometimes consolidating debt is the best way to go. This means calculating the amount of debt you owe, then borrowing the exact amount from one creditor to pay off your debts. With this, you get to save money from all the accrued interest that you would have paid from multiple loans and have a central person to pay your debt to.

If consolidating your debt is not an option, you can speak to your creditors. You can ask for an extension of your repayment period or a loan modification, depending on the options your creditors offer. This gives you some breathing space to be able to clear your debt without having to compromise on your basic needs.

5.      Now, it’s time to pay your debts

 

Once you have completed the above process, it is time to repay your debt. Set aside a chunk of your monthly salary to pay off your debt, or you can ask your bank to redirect payments to your creditor. This way, you do not have to worry about falling behind on your debt and getting fined for late payments.

It may seem like you are not making any progress, but do not lose hope. The best way to ultimately pay your debt is to deliver the little you get every time.

6.      Set up an emergency fund

 

Yes, you read that right! You must be thinking setting money aside while paying off debt is unconventional, but it is the right way to go. Creating your emergency fund will help you keep afloat during tough times.

Instead of paying the maximum amount of debt monthly, you can decide to put the extra amount into the emergency fund will help cushion you on those months when your income is low.

Final Thoughts

 

Debts can weigh you down, as getting out of debt can be challenging. To get control of your life and keep your finances in order,  you need to pay your debts first. Once you have an excellent financial stand, you can create more wealth and have your money making you more money.

With the above steps, you’re sure to get on the right track to clearing your debt and getting out of the CRB for good.