We all strive for financial freedom and the triumph that comes with it. When you\u2019re in debt, having that financial freedom may seem impossible.<\/p>\n
Managing your finances doesn\u2019t have to be a daunting task. And it\u2019s worth remembering that we\u2019re experiencing one of the most challenging times that any of us have faced before.<\/p>\n
For most people, Covid-19 hasn\u2019t just been physically and emotionally draining, it\u2019s also been financially devastating.<\/p>\n
And as a result, many of us do not find ourselves repaying debt, which leaves little money to save.<\/p>\n
Of course, not every debt is bad. Home loans, vehicle finance, education funding and business finance can all be excellent ways of moving forward towards the future you want.<\/p>\n
But there\u2019s also debt that you want to avoid, such as high credit card balances, out-of-control store accounts and loans for impulse purchases, to mention a few.<\/p>\n
Some of these \u2018bad\u2019 debts have been unavoidable over the past 18 months, but if you find yourself spending a lot of your monthly income paying back debt, now is the time to take action to get your debt settled.<\/p>\n
The good news is that, while it may seem impossible now, with a little careful planning, it is possible to get out of debt and transform your financial reality.<\/p>\n
Here are five ways to do just that:<\/p>\n
The first step towards a debt-free life is acknowledging all the debt you have.<\/p>\n
It takes courage, but it\u2019s essential. Sit down and make a list of every cent that you owe on cards, loans, finance agreements and the like.<\/p>\n
Including the amount you\u2019re paying off on each debt as well as seeing how much money you\u2019ll free up by paying off your debts can be incredibly motivating.<\/p>\n
When you see all your debt in one place, it can be tempting to tell yourself you\u2019re going to sort it out all at once.<\/p>\n
You\u2019re not. Rather focus on one debt at a time \u2013 preferably the one with the highest interest rate first \u2013 and find a way to pay a little more than the required minimum repayment for a particular debt every month. It may require sacrifice, but it\u2019s worth it.<\/p>\n
Once that first debt is settled, move on to the next one, and so on.<\/p>\n
It\u2019s a common misperception that if you have debt, you shouldn\u2019t be trying to save.<\/p>\n
The truth is that saving, even if it\u2019s a small amount every month, is one of the cornerstones of getting and staying out of debt.<\/p>\n
Having a savings balance enables you to pay cash for things that you would previously have bought on credit.<\/p>\n
So, having a nest egg is like a safety net, preventing you from falling back into debt in the future.<\/p>\n
Debt consolidation means taking out another loan to settle most, or all, of the smaller amounts you owe.<\/p>\n
It may seem counter-intuitive to take up more debt when you\u2019re trying to get out of debt, but a consolidation loan usually gives you a better interest rate overall, which means your debt is less expensive and you can settle it quicker, even by paying back the same amount.<\/p>\n
There\u2019s no need to be embarrassed about your debt. And there\u2019s also no need to try pay it off on your own.<\/p>\n
A financial adviser or a consultant at your bank may have some great ideas to help you get out of debt quicker and easier.<\/p>\n