So you want to be debt free so you can live your life without stressing about making monthly payments for purchases that happened in the past? It’s a great goal to have, and even though it won’t be quick to achieve, it’s very doable. Since you’re in for more of a trek than a quick sprint, you have to start adjusting your lifestyle to form new debt-busting habits. A change in behaviour can be your most valuable tool for becoming financially free, so let’s get started.
1. Get a full view of your debt
You can’t deal with your debt if you don’t know how much you have. Get the full picture first.
2. If it’s bad, get help
If your credit score is looking a little sickly, or if you have large amounts outstanding that you’re struggling to tackle, get help. Start with a financial advisor, who might point you in the direction of debt review or debt counselling. There are also a variety of methods you can use to pay off your debt, like prioritising the smallest debts or the debts with the highest interest rates first, or by taking out a bigger loan with a lower interest rate to pay for all the others. This last method comes with some extra responsibility, which we get into here.
3. Set up a budget
Get into the habit of recording all your spending (we have a handy spreadsheet for that) so you can figure out where you can cut back. Funnel all your extra cash into paying off your debt. Don’t know where to start with budgeting? Read this.
4. Don’t make the same mistakes
Getting on the right track is great, but you have to be okay with the fact that this isn’t just a quick fix. Once you’ve paid it all off, don’t use your newfound freedom as an excuse to start racking up new unhealthy debts. You have to make a permanent lifestyle change, and stick to it. If your lifestyle led to the debt, examine the way you live. Set some realistic and healthy financial goals with a financial advisor so you can start acquiring good assets, or put the money you want to be spending into investments instead. Now start kicking that debt in the butt! Good luck. 💙