With debts and loans becoming an essential part of modern life, it may be impossible to imagine life without debt. However, living a debt-free life is very much possible, as you will later learn. Here are some recommendations on how to attain this nearly impossible feat.
Rethink your spending habit.
Commit to buying only with cash. Get rid of the cards and checks. Use cash whenever you go to the grocery or pay the bills, or gas up. Save up for something that you’d like to buy rather than borrowing money or swiping your card for it. Spend within your disposable income, and leave some for repaying your existing loans.
Do the math and prioritize repayments.
It’s time to face the problem. Open those notice letters and bank statements, and then check which debt has higher interest and which needs urgent payment. Use the savings you made from changing your spending habit by paying off those debts with higher rates and those that require immediate payment.
Negotiate and consolidate debts.
Contact your creditors to discuss repayment options. Discuss with your lenders about drafting a debt reduction plan that works for both of you. More often than not, they are willing to offer you better terms with a promise that you’ll work hard to pay off your loans.
Stop borrowing and start saving money.
You are in debt so you need live frugally if you want to attain a debt-free life. Minimize unnecessary spending but do treat yourself occasionally. Anticipate large expenses and stash money for them in advance. Instead of using your card, save up for that birthday dinner, that wedding dress, or that holiday vacation.
Consider investing your money.
Once you have slowly repaid your debts and have saved enough through prudent living, consider growing your money. You are now transforming from someone with a spending mindset to someone with a saving mindset and then to an investing mindset. Talk to financial advisers regarding your investment options. You will soon see all your hard work and sacrifice have paid off. By growing your money, you’ll have the cash to enjoy the things you used to pay with a card or a loan.