Things to Do to Avoid Being in a Deep Debt Hole
A drowning meme can be amusing to other people seeing it on social media, but for the individual saddled with debt, it can be a sad, sad life. Friends and family members tend to be wary of lending further. Or sleeping at night can be difficult for the person always trying to figure out how to reduce debts — and failing dismally.
Yet there is hope. Some foresight on how people fall into debt, expert advice, and a backup plan to get back on track financially can help you sidestep common financial mistakes. Here are simple ways of making an excessive debt situation less problematic. One can even stay out of debt long-term, and get mounting arrears, promissory notes for your child’s school, and other financial baggage out of the equation.
Strategies to Get Out of Debt
There are many pieces of advice well-meaning parents and financial counselors may give. However, they may only be effective in helping you earn extra and stay out of debt if there is proper execution on your part.
The best way to get out of debt, before anything else, is to acknowledge your growing problem with personal finances, and live below your means. You may be holding two jobs but if you live an extravagant lifestyle, then chances are, you will fall into the debt trap. That means continual borrowing given lack of funds to sustain a spendthrift lifestyle. In short, you get into a debt spiral.
Your Plan A should include a well-thought-out spending and saving plan. You just need to follow through. Be aggressive but realistic about paying off existing debts, such as credit card advances/installments and student loans.
Having a credit card can be both a boon and bane. The outcome depends on whether you are able to pay the total amount on every due date. If you can only handle the minimum amount due, and you have more than one credit card, then you are bound to rack up debt.
How often would you hear about family members or friends who badly need help with credit card debt? Quite often. If you can reduce credit card debts as you go along, and keep spending under control, then only then should you carry around and keep that plastic card.
Say goodbye eventually to living off credit cards. There may be separation anxiety with your plastic cards, but it can be done, one determined step at a time. While you have not yet reached the “no credit card debt” stage, paying card bills on time and using cash to pay for many of your basic stuff will help avoid debt.
It will also be wise to set aside extra money for future contingencies. If all that you can save is a very minimal amount for your credit card payments, and you need to borrow from family and friends to cover your basic essentials and keep your sanity, then you need to go to Plan B.
Indeed, to avoid delaying paying off your debt, simply increase your income or create multiple income streams. Relying on just one job is an old-school approach to supporting yourself and your family.
A side hustle or part-time job can greatly help if you are always low on cash. A side hustle is what most people these days invest some time on during their down time to make extra money. Some of the top side hustle picks that can bring in extra cash are freelance writing, sharing your car, teaching English online, plus many more.
When choosing a side gig or part-time job, jt is best to choose one you have some knowledge about or better yet, a passion for. You may desire to be a blogger or vlogger, but unless you can build a strong following by focusing on a single niche, it will not make money for you.
If sales is not among your strengths, better not sell stuff online, even if you intend to use free marketing channels like Facebook. Your best bet would be to use your own abilities, perhaps honed skills you have put to use in your nine-to-five job, and gradually strike it out on your own by offering them online.
Staying Out of the Debt Cycle
Apart from setting aside ample amount for your side hustles, you need to stay disciplined or “money-wise” and not fall back into another deep debt hole again. Focus on needs rather than whims and wants.
Once you succeed in finding multiple streams of income, and become a walking testament to the best way to get out of debt, you cannot stay complacent. You still need to track where your money is going and start investing the extra funds you make in a wise manner.
Checking out money saving apps or other digital tools and automated platforms may pay off. Automated processes, especially during the Covid era, not only helps companies save costs and ensure business continuity, but also expedites things for consumers.
If you can train your mind on learning the `saving borrowing investing cycle’ from a money-savvy person or entity, the better your finances will be. Saving should be like a mantra. By growing your earnings or extra funds, and earning compound interest – that difference between what you have invested and the actual future value of your investment—you are in effect building a bigger cushion against debt.
A good example of sound investing is alternative lending & financing made possible by peer-to-peer funding platforms like Blend.ph. Borrow with ease from the comforts of home, and check out the loan products that suit your needs at https://blend.ph/borrower/.
Just choose the purpose for your desired loan product, be it debt consolidation (one of the ways how to reduce debts), bills payment, medical, education, business expansion, or other purposes, and start your application now.
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