If you’re engaged in a loan—regardless of your situation—you are contractually obligated to pay it back, which can be a nerve-wracking experience. You may have needed a loan or a credit card due to a life-altering event like a loss of job, birth of a child, illness, or accident. Other times, we may get ourselves into debt due to unchecked spending on holiday or simple overspending in general.
While many people find it difficult to get out of debt, there are also many individuals who have been successful at it. Not only are they debt free, they also got out of debt faster than projected with the use of proper financial instruments and payment solutions. If you’re prepared to work towards financial freedom, it is imperative to have a strategy for how you will attack that debt and to stick to it.Listed below are some recommended approaches to make progressive changes in your financial standing and become debt free.
Stop Seeking Loans
Seeking out loans to fund a lifestyle that you can’t afford (with your own means) is the fastest way to stay in debt, so if you want to be debt free, stop borrowing money and stop committing to new credit cards. It is important to recognize when you are living outside what you can afford, whether that means you are spending too much on branded clothes, expensive restaurants, or extravagant trips. Suspending your expensive activities will help you focus exclusively on the debt you currently have, and prevent you from accumulating more. This makes your outstanding debt much more manageable and easy to pay it off quickly with a well-considered and executed game plan. While forgoing credit cards may upset your accustomed payment routine, there are other effectual payment instruments you can use instead, like a prepaid debit card.
Set Aside Some Emergency Money
Establishing an emergency fund may seem like it has nothing to do with eliminating the debt you have now, but it is essential for all healthy financial strategies. That’s because if you don’t have money set aside for unexpected emergencies, most likely you will reach for a credit card. To truly be free of debt, you need to set a barrier between you and debt, which is exactly what an emergency reserve provides. To do so, you’ll want to separate your spending money from your emergency reserve by isolating pools of money in different accounts. You can do this by loading a predetermined amount onto your Visa prepaid credit card, and only using that specific card for day-to-day spending. In this way, you will never inadvertently use money that is earmarked for emergencies, and should an emergency arise, you will be covered.
Follow a Budget
Structuring a budget that accounts for your incoming revenue and your payments is essential to abolishing debt quickly. A budget will allow you to see where you realistically stand with your resources, so that you can clearly progress toward your objective. Defining a budget will reveal whether you truly have leftover cash to spend (a surplus) or if you spending more than you generate (a deficit). The goal is to increase your surplus and then allocate those funds to decrease any outstanding debt.
With some common-sense restraint and the use of the best payment option, the seemingly long journey towards a debt free life can be significantly condensed.