The decision to get out of debt is a life changer if you are willing to make the commitments required. Getting out of debt is tough because it means changing your spending habits, prioritizing debts, learning how to budget, knowing who and how much you owe them and knowing where you will get money to settle the debts. Therefore, reducing your expenses and increasing your sources of income are the two ways you can get out of debt fast. But, how do you achieve that? There are so many people who are getting out of debt every single day, and not only that, they are now focusing on saving or investing their money elsewhere.
The following 5 ways can help you manage your debts in a short period of time:
1. Reduce what you spend on clothes
Spending a lot of money on clothes can get you into debts because you will be using a lot of money on things you don’t need. Clothes are a basic need but there are extremes. For instance, you should avoid buying designer labels because they are quite expensive and you may not afford them. You don’t have to please other people by the way you look while you are in debt for buying the same clothes. Secondly, if you are looking to spend less on clothes, consider buying clothes at the end of the season when they are less expensive. Finally, learn to sew and launder your clothes properly to last longer.
2. Spend less on food
You will have to eat but sometimes you spend a lot on food especially when you have money. You should consider saving by cooking at home instead of going out, take your lunch to work and prepare a shopping list of the items you need and stick to the list. Even if you dine out, estimate your budget to avoid spending a lot.
3. Manage your banking and finance
Most people are in debt because they are poor managers of their finances. For instance, when you take a loan, use the loan for the purpose intended to avoid misusing borrowed money. In addition, you should avoid bad credit loans even if you are in dire need of money. The main reason why you should avoid these loans is that they are very expensive because lenders charge higher interest rates. Instead of taking such loans, get financial help from friends, family or even workmates because there will be no interest rates. Alternatively, you can look for lenders that have reasonable rates to avoid huge debts. While managing your finances, pay your bills on time to avoid late charges, cancel subscriptions you don’t need and stick to the budget you have made.
4. Reduce your transport costs
Whether you drive your own car or depend on public transport, there are numerous ways you can cut transport costs to reduce expenses. If you own a car, get it serviced regularly to optimize mileage, avoid unnecessary driving and buy the right gas for your car. If you can use public transport or run all your errands in a single trip, it is recommended to save costs and time. Finally, walk or ride when you can but if it is not possible, drive safely to avoid tickets while driving.
5. Lower your housing costs
A shelter is a basic need but if you are having financial difficulties, you should lower housing costs. For instance, get a roommate to split rent, move to an apartment with lower rent and rely on DIY when it comes to cleaning and repairs to avoid hiring a professional. Finally, if you own a home, consider refinancing your mortgage for a lower interest rate to save on your mortgage.
It is evident that food, clothing, and housing are basic needs but you can still save a lot of money by managing your expenses. You need to plan in advance, have a budget and stick to the budget to avoid spending money on things you don’t need. Once you are out of debt, you will find out that you can start saving and making more money because debts have additional charges (interest).