9 Steps to Getting Out of Bad Debt

  • Start by drawing up a budget and the key is to stick with it
  • You don’t really need to drive that BMW now. Sell it and buy something affordable and save towards buying your smart car cash
  • Instead of using your credit card for purchases, start using your debit card so that you can go through your financial statement and see where you can cut down on expenses
  • If you are paying monthly for an investment such as a unit trust or similar plan, stop pumping in money for now until you can recover financially
  • Buy an affordable house, buy the mansion once you can afford it. Mortgage payments can balloon especially if interest rates rise. There is no need to refinance to renovate your home if you are not currently financially stable. This is where a financial plan is essential
  • Shop smarter when you do your groceries, if you can save a dollar then it’s worth it. Buying non-branded products is an option!
  • You don’t need to buy that new couch today. Buy furniture, electronics and house hold appliances cash. If you do not have the cash now, then save until you can buy the items cash
  • If you can make the sacrifice, start paying off the small bills or the really short term debts by paying more on them and clearing them first.
  • Change your habits. Alcohol, cigarettes, a night on the town, it adds up. Rather reduce or eliminate these totally and save your disposable income.

There are dozens of other things you can do to start your journey out of debt. However, the ones I’ve listed above are usually the best starting point for most people. Remember the aim is to correct your financial mistakes in an effort to rectify your personal finances. For me, I sold my mercedes benz, put my house on rent and moved into my parents’ for a while. Four months after I moved into my folks’ place I paid up most of my small debts. It took another three months to totally pay off all my debts. Once I had done this, I could then enjoy my rent money from my tenants. However, I had to re-adjust myself to gain relief. Sometimes it is not easy to let go of what we have but letting go for now brings more rewards later.

Self control is very important when it comes to finances and money. Without self control and financial discipline you almost always end up in trouble. Changing your outlook on money can help change your financial situation. It’s that simple. Remember getting out of debt is the first step to achieving financial success but you have to take action.

“A journey of a thousand miles begins with a single step ” – Chinese Proverb

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