Every day we spend money on many things and you are likely to lose track of it. This may lead to unexpected debts. People who are in their 20’s and 30 already have mortgages from school, student loan, credit card loan and car loans. Above all this, your daily expenses, food, bills, rent, and other expenditures are going to leave you with no track of how you are spending your money when you are not dependent on anyone else for money. It feels good to spend hard earned money on yourself but what if you are going a little too overboard in entertaining yourself and your friends. It will make you end up in a heap of your own debts along with your student loan and credit card bills. If you are interested in keeping your expenditure limited and free of debts here are some ways which will help you out of your debts.
How to Get Out of Debt
Spend less than you earn monthly
The golden rule of spending your earnings is to make sure you don’t spend more than what you earn monthly. After your loans and other regular expenditure, remember to keep a restriction to lavish expenditures until you are nearly stable financially. Always keep in mind to keep some money away every month. Strictly following this will help you to also save some money for emergencies or other saving purposes. If you keep spending more than what you earn thinking you will cover it next month, you are not going to be successful in being debt free. It is, therefore, very essential to keep this in mind for debt free and peaceful life.
Keep a record of your debts
Always keep a snapshot of when and where you spend your money. Keeping a record of your transactions and expenditure will help you in the long run. At the end of the month, you can sit down and sort where and when you should be careful before spending your money.
Eliminate your debts
When you have a proper idea of your expenditure, you can finally start eliminating your debts by paying it off. Make sure you don’t cross the deadline for your payment and get into more trouble by getting fined extra money for not paying on time. This is why you should follow the second step very strictly. This way you will not miss any deadline and that will prevent you from getting into more debts. By eliminating your debts slowly you are gradually becoming debt free.
Try and reduce your interest rates
Another way of reducing your debts which you get monthly is reducing interest rates. EMI rates and interests should be carefully decided because if you go for a higher interest rate, whatever the product is, it is going to be really costly by the time you finish paying off your interest rates. Therefore, it is very essential to have detailed interest rate awareness before any purchase. Be it big or small always try to get it for very less interest rates.
Use apps that help you keep track
By following the above four steps strictly you are 70% successful on your way to debt free life. The last step to follow is to install apps available in the market for keeping track of your daily expenditures and loans. There are apps which will help you and alert you when you are going over the limit. This way you can lead a debt free life and even save a little for your future expenses.
These 5 steps are proved very effective if you are ready to follow this strictly you can have financial freedom. If you can finish off your debts in your 30’s, it will be really helpful for your future which will boost your savings when you are earning high in your 40’s and 50’s.