We’ve all heard the horror stories of people who have fallen into a monstrous pit of debt which they either can’t climb out, or spend their lives struggling to. 

“That won’t happen to me…” is the natural response we have to reassure ourselves. 

But the truth is, falling into debt can happen to anyone. And, if we’re not careful, it could have a huge impact on our lives, the kind we could rather do without!

If you’re currently in debt – don’t fret. There are ways to get your debt under control and regain financial freedom, but it will take consistent work and commitment. 

Read on to discover how you can master your debt, regardless of your financial situation.

Why Do We Fall Into the Debt Trap?

We may be tempted to think anyone who gets into debt is automatically irresponsible with their money, but this is simply not true. 

Firstly, while debt can come from reckless spending, impulse purchases and out-of-control store accounts, it can also just as easily come from hard times (and we’ve had plenty of those over the past two years). 

Covid and the resulting recession did a number on all of us and many of us lost our livelihoods and incomes and had to turn to loans and credit cards to help us get by. So go easy on yourself! It’s all about the recovery, after all. 

Secondly, it’s a mistake to think that all debt is bad debt. As a rule, we should be trying to minimise the debt we take on; however, there are plenty of times that debt can benefit us. 

Taking on a mortgage, a car loan, a student loan to study or a business loan to launch your own venture are all examples of how debt can help us to achieve our dreams. 

Regardless of how it happened for you – we’re here to help. It is possible to get out of debt and change the course of your financial future for the better!

How To Get Yourself Out Of Debt

Face your debt head-on

The first step is often the hardest because it means you have to take a good long look at the reality of your situation. Debt can be easy to ignore, especially if you have separate accounts each sending reminders, preventing you from seeing the bigger picture.

It’s time to be honest and face your debt head-on. Sit down and make a list of every existing debt that you have, how much you owe and what the interest rate is. 

This may be hard to do at first, but getting some visual shock therapy can be incredibly motivating for taking steps to eliminate your debt.

Get a (realistic) plan together

With all your debts accounted for, it’s time to put together a plan of action. If you haven’t already, now’s the time to draw up a monthly budget to track your monthly income and expenses (including your debt repayments). 

Now decide which debts to pay off completely first. We recommend going for the debt with the highest monthly interest rate first, to get it out the way. 

No matter what you do, never try to pay off everything all at once unless you have separate savings put aside that allow you to do so. It will just result in even more stress for you – rather tackle your debts strategically and incrementally.

Don’t be tempted to borrow from loan sharks or informal lenders, as they often charge a much higher interest rate.

Pay off as much as you can each month

Once you have a plan in place to tackle your debts, you need to decide how much monthly income you can retarget towards paying off your debt as quickly as possible. Looking at your budget can help with this. 

It may require making a few sacrifices, like eating out less or cutting your gym membership which is no fun (let’s be honest). But remember that the results will be future-you completely debt-free and able to enjoy life. The results will be well worth the effort you make now.

Wherever you cut or trim your expenses, always try to pay off more than the minimum amount required. It will help you get out of debt faster and with less interest.

Start a side hustle

If you’re really feeling the pinch and can’t find any area where you can cut down your costs, why not start a side hustle? Don’t underestimate how much a little extra income that can make on paying off your debts sooner. The gig economy is perfect for this.

Think about a passion or hobby that you might have – how could you monetise it? Perhaps taking a part-time writing gig or offering some extra tutoring in the evening? It could even be picking up a few shifts working at a local restaurant. The sky’s the limit when it comes to side gigs. 

Got some extra clothing lying around or books you never read? Why not sell them online (social media marketplaces are great for this) or at a secondhand store? Whatever you choose to do – earning extra dosh to pay off your debts more quickly can be a real game-changer.

Change your lifestyle

Just making that decision to get out of debt is already life-changing but, to make sure it never happens again, you’ll need to take it a step further and change your lifestyle. 

Whether it’s cutting up or locking away credit cards, closing store accounts and adopting a stricter monthly budget to stick by, making these changes to your life will help you to keep your spending on track. 

Once you’re living within your means you can start putting money away as savings. You can let those savings build up over time or simply put money away to treat yourself as a reward for all your hard work! The fun thing about saving is you get to decide how you spend it – and you’re not paying anybody back for it!

Conclusion 

Remember – you don’t have to go through this alone! If you’re feeling overwhelmed, talk to a friend, family or even a debt counsellor. Motivate yourself to stay on track by setting daily reminders of how much closer you are to your goal of being debt-free – and what you’ll do once you achieve it!

The content provided in this article is provided as general information. It is not intended as nor does it constitute financial, tax, legal, investment, or other advice. We accept no responsibility from any loss arising as a result of your reliance on information contained in this article, any related communication or on our app.