Hello everyone! It's Anna again, and I think it's time for us to start a new rubric dedicated to finance! As it's my third finance-related post, I can't even say that I'm going to talk about the things that are not typical for me. But to my surprise, it resonated, so I continue to share it with you.
You may not be aware, but I had student debt that I luckily managed to get rid of last year. Thus, I understand that paying off debt often seems like a daunting task. But with some careful planning and dedication, it is possible to become debt-free. As for me, being debt-free is one of the greatest feelings in the world. So I think I can share with you some tips based on my own experience. Maybe I won't tell you anything new, but at least I know it really works. Here's my short guide to paying off debt and becoming financially stable.
Create a Budget
The first step in paying off debt is to create a budget. This means that you should take a closer look at your income and expenses and realize where your money is going. Once you have a clear understanding of your finances, you can create a plan for paying off your debt. Here's how I did it. I have set a certain percentage of the amount that remains after paying taxes and covering all major expenses, including my student loan payment. Then I set it aside to accumulate funds specifically for covering my debts faster.
Prioritize Your Debt
When it comes to paying off debt, it's important to prioritize which debts to pay off first. Generally, it's best to pay off high-interest debt, such as credit card debt, first. Once you've paid off your high-interest debt, you can move on to paying off other debts, such as student loans.
Cut Your Expenses
If you don't yet have the opportunity to earn more, you have to free up money to pay off the debt by cutting your expenses. This may mean making sacrifices, such as cooking at home instead of eating out, canceling gym memberships or various subscriptions. Another good idea is to negotiate bills, such as cable or phone bills, to see if you can lower your monthly payments.
Increase Your Income
Another way to pay off debt is to increase your income. This may mean taking on a part-time job, selling items you no longer use, or starting a side hustle. Any extra money you earn can go directly towards paying off your debt. That's how I became a freelance writer.
Consolidate Your Debt
Consolidating your debt can also be a helpful way to pay off debt. This involves taking out a low-interest loan to pay off all of your other existing debts. With the help of debt consolidation, you will have just one monthly payment. This will make it easier to manage your finances and prevent late payments. Also, it may even lower your loan payment amount.
Paying off debt is a marathon, not a sprint. It's important to stay motivated and notice your progress along the way. A long journey is made up of multiple small steps. Thus, instead of being focused on your final result, set small goals for yourself and keep reaching them. Also, don't forget to praise yourself when you succeed.
What I want to say in the end is that paying off debt is a challenging but achievable goal. As someone who has successfully paid off my own student debt, I know for sure that it's possible to become debt-free with hard work and dedication. Hope this guide was useful for you guys!