How to ditch 'Squid Game': Learn some effective ways to get out of debt!
It's ok, you're already here. But you can get out of it.
Some people go through it with ease or avoid it easily, whilst some just have a tough time dealing with debt. How do you then learn from that and do better?
Here are some tips:
1. Create an emergency fund
Making an emergency fund can make you feel accomplished. Having money in your savings account can be extra helpful if ever you are in a situation like the COVID-19 pandemic or the KZN unrest, where so many people lost their jobs.
You know you can fall back on something should unprecedented times arise. Many financial experts suggest that people keep six months’ worth of expenses in an emergency fund. If that is not possible for you, you can do as little as you can but having one is important.
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2. Make a new budget
Budgeting is so critical as an adult with multiple expenses and bills upon bills. Budgeting can help you pay off your debt faster, therefore making you more financially secure.
Note down what you earn every month and then have all your expenses but then include your monthly repayment there.
After that, take a look at how much you have left. From this, you can create a realistic budget and stick to it.
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3. Cut unnecessary spending
You can reflect on the things you are spending your money on. Is it too much clothing or gym supplements or shoes or PS5 games?
How necessary are those to your daily needs and the household proceedings? We are not saying don't spoil yourself and enjoy your money. We are just saying review any monthly subscriptions like for an online magazine of some sort and cancel. Or cut down on takeaway food to only once a week or a month.
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4. Make a financial inventory
Have an inventory of your debts. So in short, write down all the people or companies or banks you owe.
Every time you list a debt, include the following information:
- The person/bank/company name
- Your current balance
- Your minimum monthly payment
- Your interest rate
You can then add up all of your debts, take a deep breath, and look at the total. Then have a number of months you are hoping to be done with each creditor.
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These are tips that one can use to get out of a tight situation financially. It affects so much more than expenses but emotional and psychological well-being, too.
So, as soon as you can, deal with it.
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