Last Updated on 8 May 2022 by Heavensa

This guide will teach you how to live a debt-free life and sort out your finances. We will go through the 3 steps that you need to take to get out of your debt and stay out of it for good.

Introduction: Why is Debt Bad?

Debt is a form of borrowing that can be a good thing when used appropriately. However, it is often a bad thing when not managed correctly.

Debt can be helpful when you have an emergency and need to borrow money from the bank to pay for something. It can also be helpful if you are making too much money and need to invest in something that will make more money in the future.

However, debt becomes a bad thing when it’s used for things like shopping sprees or other things that don’t generate income (like buying expensive items).

How To Get Out Of Debt

1. Write Down All Your Monthly Bills & Make a Plan

You’ve just looked at your bank account and realised that you’re in debt. You feel like you’re drowning and the only thing that’s keeping you afloat is your monthly paycheque. This is a common feeling for people who are in debt, but it doesn’t have to be this way. There are ways to get out of debt, first, write down all your monthly bills.

The first step is to make a list of all the money that you owe on a monthly basis. Write down every single expense, from utilities to groceries to entertainment to rent or mortgage payments. Include any loans or credit cards with monthly payments as well as any other expenses that come up every month such as car insurance or student loans.

2. Limit Spending

The most important thing to remember is that the more money you spend, the more money you will need to make. The less you spend, the less you will need to make. Limit spending doesn’t have to cut out everything, but take a look at your subscriptions for example and see if anything doubles up. You often find that different cards and accounts offer subscriptions that you might already be paying for.

Another good way to limit spending is to share accounts, I share my music, Amazon Prime, NowTv, Netflix and basically anything we have with at least one other person and share the costs. This drastically reduces costs down.

Make sure you’re not paying for anything you don’t use, and check that on a monthly basis. You can also work on spending less by cutting back on things like dining out, shopping for clothes, and buying new things for your home. Upcycle, look on Facebook Marketplace for free things, and waiting to make sure you really need something before spending can all help reduce your outgoings.

3. Prioritise Your Debt

Now you’ve worked out how much more money you can save a month by cutting down, it’s time to start throwing that money onto your debts and cards. Find out which have balances with the highest interest and pay them off first. See if you can move onto a 0% balance interest card whilst paying them off to avoid interest monthly and consolidating your debt always makes it easier to pay off. You don’t want to be focussing on something that is interest-free for another 2 years when you’re about to hit the start of a high interest period with another card. Prioritise your debt.

Set goals and stay committed, you can do it!