1. Always make a monthly budget of spending.
Most of the times it happens with us that we don’t plan our monthly budget and then we tend to spend more than our last month and it keeps on increasing on monthly basis and this is how we run out of money and we get caught in small debts.
To avoid this situation, make a monthly budget in advance based on last month’s spending and try to keep it less than last month’s spending amount.
If you do so and will follow this practice on monthly basis you can see the remarkable changes in your spending habit, and your cash flow will increase and in turn will be one step ahead in managing finances and not to go in small debts.
2)Stop using credit cards to pay debts.
This is very common now a days that people use credit cards for paying their electricity bills, water bills or phone payments and again for paying small debts which they carried forward from past months.
But if you see closely they are making their situation worst for future as they are building a debt mountain for them which will be difficult to take off from their head .so it’s always advisable do not carry forward any bills from previous months and never use credit cards to clear debt.
By following few rules for credit cards, you can easily get rid of your debts.
3)Do not borrow money from friends.
It was common among friends in college days to borrow money for some quick fixes related to fees, petrol, books canteens etc. and later on also if this habit of borrowing money from friends keep on increasing then again you are creating cycle of debts for yourself and you will get caught into it.And to return money to one person you take money from other and this becomes never ending process for you.
One most important thing relationship get spoiled and the respect for you get reduced because it shows the person’s ability whether you are capable to return the money or not.
You have heard one very common phrase you are the mixture of five people you spend time with .so look around your circle are they doing the same thing borrowing money from others if so, then change your circle.
Instead you should be in such a position if someone needs money in urgency you should give money to them.
So, go giver not the receiver.
4)Pay in cash always.
Most of the times there are many offers gets run by credit cards so people prefer to buy on credit cards and get stuck in small debt cycle.
So, make sure that if you have cash and can afford it prefer to buy in cash always.
For example, all electronic items buy in cash always. If you don’t have cash at that particular moment then postpone it to buy next time.
In this way if you discipline yourself then it will be easier to go one step ahead for debt free life.
5)Clear small debts first.
You must have heard from many people first do larger things then small things will get done automatically.
But we always underestimate smaller steps smaller actions which can give us best result.
So instead of paying large debts first try to clear small debts first, in this way you will clear more number of debts and u will get positivity to clear bigger debts and you will remain with very few number of debts.
For example, electricity bill, water bill, phone bill, house rent etc start clearing from lower to higher order on monthly basis and keep doing this regularly to clear your debts.
6) Create extra sources of income to pay debt.
This is the best approach to clear your debts fast.
Each person has some extra qualities .so apart from your job you can start working as a freelancer, provide any kind of service to customers and earn money from it.
For e.g. Digital marketing, coaching of particular subject, English language training program etc.
You explore upon your liking, your strengths hobbies and you will get ideas around it to earn money from it.
7) Pay more than EMI to clear debt fast.
This is specially for the big amount loan like car loan, personal loan and hose loan.
Try to pay by repayment option to pay in lumpsum amount to decrease number of years for the loan tenure.
Or increase the EMI amount on monthly basis whenever you get salary hike in your job to shift your salary to clear your debts.
In this way you will come out of larger debts quickly and that amount you can use for other investment options like mutual fund, index fund, stocks etc.
8)Do not add new loans until you don’t have a plan to clear it.
As it’s very easy to get loan now a days people tend to buy each and everything on loan at very early stage of their carrier. As lifestyle is at center of attraction people buy the things which they not required or not affordable and this all because to show their status in the surrounding.
If you really want a peaceful life do not make these mistakes at very younger stage.
Suppose you bought a mobile on EMI first clear it then go for second option like bike then clear it then go for next option. In this way if you will follow you will collect your necessary items also and at the same time will not be in huge debt. Go step by step and you can buy each and everything in cash always if you follow certain rules you can get debt free life.
That’s why I said do not add new loan until and unless you have plan to clear it otherwise u will always run out of cash and will be clearing debts lifelong.
9)Divide your things in need & want, buy only needs & postpone wants.
Let me elaborate this with few examples.
Suppose a person needs a mobile and wants to switch from simple phone to smart phone so directly jumping from small simple phone to very higher brand will be a want but need would be a basic smartphone which can solve your purpose.
Another example is buying a car.
In metropolitan cities traffic is the main issue so instead of buying a car one can buy a two-wheeler to reach to particular destination in time.
Or other scenario can be instead of buying a car one can book online Car for pick and drop to save money. Because most of the time we buy a car becomes showpiece for the house .So, don’t fall in such traps.
Always divide each and everything you purchase in need and wants. buy necessities postpone wants and you will surprisingly find you were actually not required those wants at that time. Try this you will be surprised with the outcome. Follow this magic rule for each and everything before buying.
10)Keep going & soon you will be out of debt.
You should be always in positive approach to looking things around you. Gain extra knowledge about finance. follow all guideline.
Keep going and soon you will be out of it.
I can definitely understand the one who is in huge debt and don’t understand how to come out of it.
If you think you got stuck in this process and don’t know how to come out of it.You want somebody to help you ,guide you ,teach you, how to come out of debt and live a peaceful life ,then don’t worry I am ready to guide you. you can book a free one to one call with me to know more about it.
Click the link below and I will see u live.
My best wishes are always with you,
Stay healthy, wealthy and happy always.
Keep learning, keep earning
Stock goals
Sandhya B.
(Your health to wealth coach)