Knee Deep in Debt? Regain Control Over Your Finances With These Effective Solutions

Knee Deep in Debt? Regain Control Over Your Finances With These Effective Solutions by CF Lieu - Certified Financial Planner Malaysia

Debt. The big “D” word. We’re all in it, some more than others. It’s an anxiety-inducing state that we find ourselves in, most often out of pure necessity. None of us want to be in debt, but life throws curve balls that only a loan can solve. It seems as though every breath we take has interest we have to pay, all because the cost of living at the bare minimum has, in itself, a financial barrier to entry. This is why millions of people world-wide are searching for solutions to help them with the money that they owe. Whether it be through having a side gig or through debt consolidation, there’s always a way out of seemingly impossible financial situations.

Here are some simple and very doable ways to get control of your finances and move one step closer to being debt-free.

Debt Consolidation

The first thing you’ve got to tackle, without a doubt is tracking how much money you owe. If you can find a way to delay or pool together your payments, do it. Debt consolidation services do exactly that. If you’re at the end of your rope and trying to buy time and save your credit score, you might want to look at Debt Consolidation vs. Bankruptcy. Bankruptcy can stay on your permanent record for 10 years. Late payments stay on your record for 7 years. Those are both measures that can affect your ability to get better loans, a house, a car—pretty much every single large life purchase. So when you consolidate debt, what you essentially do is take out a larger loan to pay off a plethora of loans to different institutions. It means bringing all your payments to one sole lender, simplifying the process and allowing you to focus and budget with one due date. We all know that when it comes to paying off bet, tracking it and staying on top of it, relative to the first and fifteenth is not an easy task. So why not make it better with a single payment? Interest rates vary, as does everything in finance. The trick is to find the best rate and the most sensible option for your situation. After that, it’s a step closer to being out of debt forever.

Have A Budget

If you don’t already have one, create a budget. Create a barebones budget that gives you the least amount of wiggle room while still being comfortable. The misconception with budgets is that it’s too tight or too loose. The comfort spectrum will start to waver and, like many, unnecessary things become the highlight of our seemingly necessary luxuries. Cut those out. If it’s not helping you get out of debt, it’s creating more. One cannot lull themselves into a notion that they can put off having to pay debt. It’s a great way to do yourself deeper in the hole. So find a budget that works, get an app to track it, and stick to it until you have the financial ability to save for yourself and your future. If you’re a bit confused as to how to set one up, here’s a few tips

● List out all the bills you have to pay, give a total, plus 10%

● If you have direct deposit, create a separate account with that exact amount taken out of your direct deposit, pay all your bills digitally through that account.

● Shred any physical card related to your bills account

● Pay them first, then yourself, then save.

● Look at the list and eliminate anything that doesn’t necessarily contribute to your future plan of being debt-free.

The Snowball Method

After you’ve found a good patch for your current debt situation, your next step is to implement a plan to move out of debt altogether. This is done by having a goal-oriented strategy towards paying off the debt, period. One such strategy is called the “snowball method” of paying off debt. Let’s say you’ve got your budget ready and know exactly how much cheese you have after the bare necessities. Focus on paying off your smaller debts while paying the minimum on your larger ones. Once the smaller ones are paid off, you can put the exact same amount, divided among the larger ones. It snowballs until the total sum you were paying for multiple debts are focused solely on the big ones. It’s that simple. It’s not easy, but the concept is a lot simpler than trying to pick and choose what to pay off in order of urgency. This provides the much needed structure many people lack when it comes to money.

Side Hustle

There’s another way to get out of debt aside from re-allocating and reorganizing your finances. You can make more money. I know that most of us don’t have enough time in the day. We have our day job, kids, relationships, commute, etc. But having a side hustle can, and will, help us if we can find a worthwhile activity to pay out. If you can write, or have any expertise in the field of content creation, freelancing or contracting for a company can give you that extra boost you need to keep you on your feet while paying off debt. It’s a grind, no doubt. But it’s something positive that you can focus towards your goal. Who knows, maybe one day you can create enough influence and experience to make that sideline your primary source of income. Plus, with the internet being so available, that route can most definitely give you the freedom to maximize your time and efforts.

Knee Deep in Debt? Regain Control Over Your Finances With These Effective Solutions by CF Lieu - Certified Financial Planner Malaysia

Debt is horrendous. None of us like it. But the fact that it’s been sewn into the fabric of modern society as a means to create decent livable conditions means it’s unavoidable. So the best that we can do is pay off the big ones and manage our money in the meantime. That’s what it’s all about. So keep your chin up, your feet on the ground, and your gaze towards brighter days. They will come, no doubt.

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