Are you in debt up to your neck? Before you drown, we have some tips for you. Debt is exhausting and embarrassing to most people. Unless it was for a business or an emergency, avoid debt as much as possible. Credit cards and student loans got designed to immerse you in debt before you can earn a living.

This catastrophe is the predicament of most of your age mates. You must be exhausted from the dead-end pursuit of viable solutions. Your monthly savings don’t seem to be increasing; you live pay check-to-pay check and can’t afford to pursue your dreams.

It is your lucky day; the following tips will guarantee you a debt-free life. Whenever you decide to follow these tips, get ready to make sacrifices and have the utmost discipline.

#1: Live Below Your Means

The reason you are in debt in the first place is that you lived beyond your financial capacity. This tendency has forced you to borrow money from banks and friends to finance your luxurious lifestyle. Do not be fooled that routine is unstainable, and you will eventually bite your tail.

To compensate for all the money wasted on your unnatural luxury, cut on your expenses. It is advisable to live below your means to make up for time and money lost. For example, if you can afford three dresses, buy one. If you can buy take out, opt to cook low-cost meals for dinner.

#2: Get Professional Guidance

Whenever you are in a financial crisis, it is easier to declare bankruptcy. However, before you go down this road, consult with a professional. Some might suggest making agreements with debtors to save your reputation for the foreseeable future.

These accords include an IVA. You may be wondering how does an IVA works. It is an agreement between the debtor (you) and the creditor for payment in installments. In place of a court order for collateral seizure, you explicitly outline the strategy for repayment. The creditor gets deterred from contacting you. The solvency consultant takes over communication between you and the other party.

It doesn’t matter if your future is bleak. An IVA can restore and redefine your sense of direction.

#3: Make a Budget

Master making spreadsheets for even the most insignificant  expenses. This chapter is a new beginning; embrace it fully and rectify your mistakes. Live on a strict and realistic budget. Cut out all non-essential bills.

For example, regular visits to the hair salon or massage parlor have got to go. Instead, get your partner to do them at zero costs. It is high time you learn how to do your hair; hairdressers are expensive; they do nothing extraordinary for your hair.

#4: Stop Any More Debt

Avoid borrowing any more money from banks, friends, and family. It will be enticing to get quick notes to pay off the ones that are due. However, this practice will cause a spiral of debt for the rest of your life. Obtaining debt to pay off debt is similar to jumping from a frying pan into the pot.

It is highly likely that in some instances, you will feel like giving in. In moments like these, remember that your goal is not to solve the problem long term. Any shortcuts will drag you back to the start of the problem.

#5: Ask for Lower Interest Rates

At your lowest point, you are at liberty to request your creditors for mercy; on bankruptcy claims. Most banks might consider lowering your rates than losing the whole sum indefinitely. It will be in your bank’s interest to gain even the slightest of the loan back.

Although it may seem like you have no leverage, ask for a fair bargain. After all, it is your creditor who stands to lose if you don’t pay him/her back. The assumption that your fate is permanent is false. You will not be the first or the last to be in debt, do not be discouraged. You might be surprised at the loan cushions offered.

#6: Get Side Hustles

You are in a position of vulnerability whenever you owe someone else money. The debts you have may eventually drag you head-first into poverty. With this intensity, it would be the perfect time to take up those three jobs. It will scar your social life, but discipline is the only way out of debt.

Modern online blogging, Video freelancing on YouTube, or article writing are good options for your non-skilled venture. However, if you have expertise in graphic design and copywriting, you are in a gold mine.

Most of these side hustles are your passive income earners. For example, a video on YouTube is only done once but can pay you for a decade into the future. Do not get carried away; you will still need to put in some work, but the results will supersede the effort.

#7: Have a Contingency Fund

As you build your financial pillars, always create room for an emergency fund. Your debts may be due to a sudden need for financial assistance. Create a habit of having some money set aside for such situations. It would save you a lot of setbacks and frustration.

For example, the 2020 COVID-19 pandemic might have forced your business readjustments. Moreover, you might have been laid-off work. The need to survive and keep your trade afloat might have led you straight into a debt crisis.  The most important lesson you should take with you is the fundamentality of savings (an emergency fund).

In some cases, if you have extra savings, use them to pay off your debt. It may take time to revamp your emergency fund, but it will get you out of the headache of debt.

Final Thoughts

Debt is avoidable. Become financial literate through an online platform that provides free information. Debtors often have anxiety and general underperformance. Strategically improve your daily journey by following the above hacks. Do not get deceived, debt is rampant today, but it is not inevitable. Because your friends have liabilities doesn’t mean you have to join them.