5 Best Ways to Eliminating Debts Forever
By Credit Warehouse
Debts commonly referred to as ‘gbese’ in Nigeria is a term used when a person defaults in paying back money owed over a period of time. Money that may have been borrowed to settle an urgent need, meet up with daily expenses, business requirements, financial deficiencies, etc.
However, there are good debts and bad debts. What then is the difference? A simple rule is — if it increases your net worth or has future value, it is good debt, but if it does not, and you don’t have cash to pay for it, then it’s bad debt.
Good debt, is money that you borrow for an investment that will grow in value or generate long-term income. An example is a student loan, you obtain a college degree and begin to earn when you get a job. Home mortgages should fall into this category as well.
On the other hand, bad debt, as the word implies, is the bad egg here, no appreciating value. It is a monster that must be eliminated else could leave one unhappy for the rest of a person’s life.
Truth be told, being entirely debt-free in this modern age is almost impossible to achieve. As we grow older, more responsibilities arise, and with more responsibilities, come more bills and unexpected expenses. Being financially literate and learning to make the best money decisions would help manage your expenses at length. However, you must first have the mindset that you can get out of and stay off debts. It may require some level of patience and consistency. First, start by figuring out how much you owe and how you can eliminate it.
You must first have the mindset that you can get out of and stay off debts. It may require some level of patience and consistency.
Eliminating and Staying Out of Debt for Real
It always seems impossible until it is done.
- Nelson Mandela
- First thing you want to do is to cautiously assess the status of your debts. How much is owed, expected date of payment, interest rates or charges on it. Calculate it and calmly start planning how to tackle the situation. Also, put into consideration your account statement.
- Secondly, you can create multiple sources of income. In order to quickly get yourself out of those debts, you need to look beyond your past income and look through side hustles. The kind that won’t require so much capital to start with, else it could be situation of pouring gasoline into the fire. You could also learn a new skill online for free and offer services in that regard. The key is paying off the debt from the extra monies made.
- Thirdly, drop expensive habits and live within a budget because if you don’t, you may never stay out of debt. You want to live the ‘La Vida Loca’ life, think about your debt(s) first. You need to re-evaluate your spending habits really, lest you keep running in circles. Review your daily expenditure and decide what purchases are necessary and what needs to be kicked out. If you constantly have to borrow to meet up with basic needs, then there is a red flag, and the solution should begin from you not by constantly borrowing. Cut down on expenses as much as possible to get to your goal.
- Section those debts into the category they fall under depending on the source and type of debt. Start paying from the lowest, that way you have lesser debts to pay as times goes. If it’s a single debt worth a lot, pay over average on any current debt. Whether business loans or personal loans endeavor to start or it keeps pilling and it may never go away except you start.
- Finally, after all debts have been paid, create a budget for your finances and stick to it! This way, you are in control of your spending as you are obligated to stick to a budget, which in turn would help you save. Also, endeavor to set some money aside for emergencies.
Being debt-free gives you peace. Each of these steps is necessary for eliminating and staying out of debt.
