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Debt is like a robber who slips into your home while you are away and robs you of your peace of mind, self-worth, and security. If you have been in debt or you are in debt right now, you know how destructive it can be if it’s not managed effectively. Nobody would love to live under the stress of debt forever. The ultimate dream of every individual is to pay off their debt and start living a debt-free life.
Many people usually try to live a debt-free life, but things get tough and they give up. However, your case can be different. So many people are paying off their debts every day, and you can be one of them. Are you ready and prepared to get on the path of financial freedom? Here are some of the proven ways of paying off debts and living a debt-free life.
Organize Your Debts
The first and most critical thing that you are supposed to do to get out of debt quickly is to organize your debts. There are several ways you can organize your debt for a quicker and more effective pay off plan. For instance, you can use the debt snowball method where you list all of your debts on a piece of paper from the smallest personal loan to the largest.
From there, you can start paying the minimum payments on everything else except the smallest debt. After you have done this, you will need to take the surplus money you accumulate after paying your bills and throw at your smallest debt. For instance, if you’ve a $150 surplus and the minimum payment on the first debt is $30, now you will pay $180 every month until that debt is gone.
Pay More than the Minimum
The other favorable technique that will help you get rid of your debt faster is paying more than the minimum payment every month. Sometimes, it can take you forever to repay your personal loan if you are making the minimum payment every month. If you want to repay your loan faster, make sure that you pay as much extra as you can afford. Keep in mind that even an extra $25 every month will help you to repay your debt much faster.
Track Your Spending and Identify All Areas to Cut Back
Tracking your spending and identifying areas to cut back can save you as much money as working on a part-time job. However, you can’t know how much you can save unless you give it a try. Make sure that you track every single coin that you spend over the course of the month. Be honest with yourself to ensure that this method works for you. Once you know your spending habits, go ahead and identify all areas you need to cut back and allocate the money that you save to paying off your debts. Luckily, there are lots of smartphone apps that can help you track your spending.
Stop Using Credit Cards and Start Using Cash
The only way to free yourself from the chains of debt is to avoid using your credit cards when shopping. Although it may be difficult, you have to do all that you can to stop using them. This is the only foundation of a debt-free house. You will feel a lot of resistance, but you have to do it. After all, what is the point of you paying off your debts faster, only for you to continue using the high-interest credit cards? The bottom line is that, if you are committed to living a debt-free life, you will have to ditch your credit cards.
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