• Sunday, July 14, 2024
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BusinessDay

19 tips to dealing with debt

Debt-crisis

Are you in debt? Are you facing challenges meeting your financial obligations? Are your creditors harassing you to repay them? If your answer to any of these questions is yes then don’t despair. This is because everyone owes at one time or the other during the course of theirlifetime.

Every year lots of people get entangled in debt and seem powerless and unable to break its hold over their lives. Many have sincere reasons for getting hooked – inflation, declining purchasing power, low earnings, unemployment etc. There are those who get hooked for“non-sincere” reasons –high taste, living above their means, emotional spenders and squandermania.

I have it on good authority that many people do not like to repay their debts. In my experience most people would rather adequately forget, pretend or even avoid their creditors altogether. This only serves to build animosity between both parties, and may push creditors to seek other means to recover what is owed. Even financial institutions like banks are facing a tough time getting their debtors to pay up.

Here are some tips that will help you deal with debt:

Commit to repaying your creditors:

Stop burying your head in the sand, pretending that your debt does not exist. Your creditors need their monies for other purposesas well, and you must seek out ways and means to pay them. It is the most honourable and dignified thing to do.

Make sure to have the full details of exactly how much you owe:

It never ceases to amaze me how many people in serious debt crisis do not have the exact picture of how much they owe, especially those owing financial institutions with interest payments. You can’t deal effectively with what you don’t fully grasp. Make sure to be on top of your debt profile.

Don’t dodge, be accessible to your creditors:

There is nothing more upsetting, that provokes a creditor to seek other ways to recover debts than when the debtor proves elusive. Face those you owe, let them see you are making efforts and showing commitment to repaying them.

Work out a repayment plan:

Reach out to those you owe and negotiate a repayment plan that you are comfortable repaying. This plan entails making a monthly part payment every month until the debt is liquidated. No one likes to be paid in bits, however your creditors may grudgingly accept it especially when it is consistent. Do all you can to keep to the plan.

Pay your smaller creditors first before moving onto the bigger ones:

Start off paying those you owe smaller sums, then work your way to the larger debts with time. The action of paying off some of your debts no matter how small will spur you on to take on the larger amounts and pay all back as quickly as possible.

Make sacrifices:

During a serious debt crisis it is not the time to live ostentatiously. You may need to make several adjustments to your lifestyle by deferring spending, thus freeing up more monies to repay your creditors.

Learn from your mistakes:

Analyse and review the circumstances that got you into serious debt in the first place. There is definitely a point in your situation where a wrong decision was taken that culminated in a series of events leading you into serious debt. Use the current circumstance as a learning curve and resolve never to make the same mistake again.

Increase your capacity to earn:

The more you earn, the more you will have to repay debts. Strive hard to get a promotion, change jobs for a better paying one, invest in personal development so that you can create more value for your employer which you can exchange for more money.

Start a side business:

It’s not going to be easy paying debts, and surviving on the rest, which in most cases may be grossly inadequate to cater to one’s needs. Try to see if you can start a small business on the side that can earn you additional income. Explore the option of using your spare time to earn extra thus enabling you to pay off your debts faster. There are many small businesses you can start with little or no capital.

Seek for a greater understanding of money:

Financial illiteracy is one of the major reasons people get into debt. I urge you to go on a personal adventure to understand how money works. You cannot control plenty of anything you do not understand. There are loads of books, CDs, DVDs and other useful literature on the subject of money. Avail yourself of them.

Work with a budget:

A budget is a financial plan with a major objective to give you a clearer picture of where your money is going. It will help you to eliminate wastages, plug leaks and enable you channel your resources to areas of importance. A budget can aid you in managing your resources more prudently and free up funds for debt repayment purposes

Avoid putting yourself under undue pressure:

Don’t allow the fact that you are in debt affect your health and wellbeing. Make sure to embrace repayments that don’t cause to run helter-skelter and agonize when they are due. Becoming ill could lead to your getting into more debt to cover medical bills.

Study the lives of the wealthy:

Nearly all rich people are using debt in one way or the other to build wealth for themselves. The rich do infact owe far greater sums to banks and other financial institutions. Many of them have faced mounting debts and even bankruptcy at one time or the other. Reading their stories might give a boost to your efforts to come out of debt.

Visualise a debt free life:

Make it part of your daily routine to picture yourself debt free. Every great achievement starts from the mind till it becomes reality. See yourself as free from the shackles of debt by taking some time out to visualize it several times daily. All that is needed to successfully visualize is a peaceful location, closed eyes and a focused mind. What you see in your mind’s eye eventually becomes reality.

Make becoming debt free one of your goals for 2016:

Achieving debt freedom is indeed a worthy goal for most people. If you are in debt set a goal to become free before the end of the year and work towards attaining it.

Celebrate debt payment milestones:

It is quite important to reward yourself as you cross several milestones in the repayment process. Appreciate the efforts and the gains that have been made. You may not be debt free yet but certain progress has been made which are worthy of acknowledging. This will boost your confidence that you are heading towards the right direction.

Avoid debt triggers:

This is the time to avoid places or things that cause you to spend and get into debt. For example someone who loves shopping even if it leads to debt should avoid shopping malls for the time being. Keep your distance from things that trigger you to embrace debt.

Employ the services of a coach:

Bill Gates is credited to have said, “Everybody needs a coach.” There is a reason why top performers have coaches who help them continue to perform at the highest levels. Getting out of debt and building wealth is no different. Look for a money coach to guide you along the way to your financial promised land.

Don’t be discouraged and don’t give up:

Do all you can to avoid discouragement and despair. It pays to remember that everyone has been in debt at one time or the other and gotten out of it. if they can do it, then it means that you can do it too.

Breaking free from debt is actually one of the major steps everyone needs to take if they desire to build wealth. Debt is meant to be used to build wealth, not to fund expensive lifestyles and purchase things we want. No matter your reason for being in debt it’s possible to break free eventually.

Work systematically on using these tips to chip away at your debts till they give way.

Kenneth Doghudje