I’m buried in debt;
My Debts going out of control;
Totally stressed out, my debt is too high
Don’t want to find yourself talking this language just make sure you follow these 3 starters to be on track and keep yourself in the pink of financial health.
1. Control your expenses, check your spending habits:
Ahhhh! We know you are saying that you already know this and so we might as well wrap up here. But, frankly knowing this and not following it is equal to not knowing, so we might as well repeat. The ABC of personal finance is Always Be Careful with your spending. You must not spend more than you earn; therefore it becomes extremely important to check that your spending habits are aligned with your income.
- Money saved is money earned. Simple! – You start saving early and cut down on expenses that stretch your purse strings, you are pretty much already on track then.
- Guard against impulse buying – That “unplanned indulging” is your biggest budget spoiler. Of course, it’s not easy to keep yourself away from temptation but writing a list before going out shopping could be a starting point to self discipline thus enabling you to save yourself a significant amount of money every year.
- Be realistic; as much as we would want to live with Alice in her Wonderland let’s remember that Pandora’s Box is the actual reality! You are the right judge to decide what to lay your hands on and what not to. So driving yourself into a make-believe mode that your purchasing decision is justified emotionally will start creating the dent into your pocket sooner than you think.Nevertheless, you totally deserve to live your dreams so if you want something really badly then write your goal and chalk out your plan in reaching there.
- Never borrow money to buy expensive luxury items you can do without. Frankly, this would be the most ridiculous act you could do. This is definitely a BIG NO!
- Save regularly- Yes, this is another adage that will never change! If you have surplus cash, invest in liquid funds. Invest regularly as per your risk appetite for wealth creation and make sure you consult the right person before taking these decisions.
2. Borrow prudently:
Borrowing money can help you do things that you otherwise couldn’t do. However, you can get into financial difficulty if you borrow too much, too frequently. Focus on investment debt like home loans and education loans. A house appreciates in value in the long run and extra educational qualifications propel your career to greater heights with better paying jobs. Limit your consumption debt; do not look for easy access to cash for short term unplanned buying. Pay outstanding credit card bills before the due date and never borrow cash against your credit card.
3. Create opportunities for an extra income:
“Where there is a will, there is a way”. However, in case managing your debts are going out of hand and you have not found a way to clear them off, it’s time that you carve that way yourself. You must try and think of options to generate extra income.
Whether taking a part time/ freelancer job position or renting a part of your home or turning your hobby into your source of income; open your eyes wide and look for other avenues to generate a second income stream, even if it is a small one.
You deserve to be worry-free with regards to your debts and that sure can be achieved via a financial plan. So that you may bid a ciao to your debt faster.