Being in debt can make you feel imprisoned, less than and generally reduces your happiness levels. I was recently in debt and I can tell you for a fact that IT SUCKS 100%. Sometimes we’re in debt because we can’t help it because the money was necessary, sometimes we’re in debt because of our bad spending habits. In my case I was in the latter category. I kept wondering how I found myself in not one but two debts which I had to pay back one quickly. They weren’t necessarily huge debts but as an unemployed person, they seemed so big and insurmountable if I didn’t get external help.
Debt can make us feel insecure, desperate, pressured and a whole lot more negative emotions but paying off our debts gives us a peace of mind and sense of relief that is unmatched. In this week’s blog post, we’re going to explore some tips for getting out of small debts. Let’s gooo!
How I Got In and Out of a Little Debt
I previously mentioned that I was in debt, but luckily for me, my first debt had been essentially forgiven after I more-or-less came clean that I spent part of the money I was supposed to keep. My second debt however was looming when I was forgiven of the first one. I knew I had to pay back the money so I could get this awful weight off my chest. I was supposed to give money to different people but I kept stalling until I spent some of the money and I was calculating I had some extra money stashed somewhere.
When I finally counted the money that was stashed, it fell short and I couldn’t for the life of me tell you where the money went. Was it a miscalculation or did I spend the money without remembering? I had to pay this money back in a few days and my head wanted to explode, where will I get money from? I was praying a little bit but I wasn’t so sure about prayer because I prayed to win the prize money for a writing competition I entered but I didn’t win a dime!
I called my best friend and told him my current situation and he consoled me. I got off the phone and put on one of my jackets I hadn’t worn in a while, lo and behold, I found some money in one of the pockets, it was way more money than I expected so I had to thank God first and I called my best friend back to tell him the good news. I checked the pockets of the windbreaker hoodie next to it and found some extra money, I was dumbfounded but not so surprised. Funny thing about me is I usually have some money that I have forgotten about in any of my pockets at any given time.
Anyway, essentially, two of my smaller debts had been paid off with some extra change and my frown or should I say frustrated look quickly became joy and excitement. The bigger debt hadn’t been paid off so I had to call my creditor to be a bit patient. Luckily for me she was understanding and the way I paid off my debt was to put my pride aside and ask one of my friends in the US for assistance (told him I can't pay him back though) and that was how I paid off my debt. Since then, I have been avoiding things that will put me in debt. My money is usually spent on buying mobile data so I had to change networks from a more expensive and more reliable one, Airtel to a much cheaper one and a little less reliable network, Glo.
How to Get Out of a Little Debt
Debt can make you feel like you’re drowning with no sign of rescue. Sometimes you may have asked those around you for assistance but they didn’t help you. Debt can be a good thing because it helps put your bad financial decisions and bad money habits (if you have any) or that of your partner into perspective and you can change things for good! So, without further ado, here are some useful tips for getting out of little debts.
1. Avoid Going In Debt
There’s the popular saying that “prevention is better than cure” and in this case it most definitely is. The negative emotions associated with debt are not worth it especially when juxtaposed with the positive emotions of feeling free of debt. When I was in university, I made sure I barely went into debt and if I was ever in debt it was usually to my sister whom I paid back as soon as I got my money. Paying her back wasn’t fun to be honest, I felt like keeping the money for myself. The other debts I fell into during my uni days was overdraft which was no more than £10 and the bank took it as soon as I put enough money into my account.
As much as possible, try not to go into debt because it can sap away your happiness as quickly as Thanos can snap his fingers (see How to Live a Happier Life). So as much as possible try to live on a budget and track your spending. If you absolutely must borrow some money, ask yourself a few questions: Is it a want or need? Is it relevant? Is there interest? Can I pay back soon? How can I pay back?
If you answer all the questions with proper certainty then you can go ahead to borrow the money.
2. Make a Conscious Effort to Stop Borrowing Money
If you want to get out of debt fast, you have to stop using debt to fund your lifestyle. The reason I even went into debt was because I was using the money (which wasn’t mine) in my account to buy data so I could be online all day every day. When you make the conscious decision to stop borrowing, you have to also cut out the temptation, so in my case it would be telling people to stop sending money for me to keep especially when I’m broke.
In your case it can be by no longer using credit cards or borrowing money from friends or family. This will help you focus solely on your current debt so that you can develop a game plan to pay it off quickly. As long as you’re willing to stick to your decision even when times are hard and the temptation to borrow is high then you will stop having a debt or borrowing oriented mind set.
3. Live on a Tight or Bare-Bones Budget
First of all, I have to say that not living within our means is why many people are in debt today and in many ways they don’t know how to budget (see 06 Costly Budgeting Mistakes You're Probably Making). Second of all, paying off your debt shouldn’t put you in a situation where you can’t even survive, you should be able to have enough for transportation and feeding at the very least.
In order to quickly pay off your debt, you will need to cut costs and live on a tight budget, the amount of your debt will dictate how tight your budget will be. According to Holly Johnson from The Simple Dollar, by living on a tight or bare-bones budget, “you’ll cut your expenses as low as they can go and live on as little as possible for as long as you can.”
A bare-bones budget will depend on what you spend your money on but it should have needs only or should I say essentials like rent, utilities bills, etc. This means you may have to sacrifice going out to eat, paying for your DSTV, mobile data, or any other unnecessary spending. A budget like this is designed to help you pay more toward your debts. For example, if you owe N50,000 and you normally pay 5,000 monthly, with a bare-bones budget, you can pay 10,000-15,000 monthly depending on how things go.
Johnson further advises that you should “Remember, bare-bones budgets are only meant to be temporary. Once you’re out of debt — or a lot closer to your goal — you can start adding discretionary spending back into your monthly plan.”
4. Sell Stuff You Don’t Need
Many times we’re looking for money elsewhere when all the money we need is lying around looking at us in form of things we don’t need at home. I’m sure you have stuff you don’t need that you could sell and make some cash, heck if there’s a pawn shop close by you can sell them and buy them back later. You can sell your stuff to your neighbours, friends, family or just sell them online via Facebook, eBay, Instagram, etc.
5. Don’t Try to Pay Multiple Debts Simultaneously
When we owe multiple people or sources money, we tend to try and pay them off all at once but we end up not really making much progress. It can feel like the debt is like a sea you’re drowning in even if you can swim.
The best way is to pay back the loan with the highest stakes first i.e. the one with the highest interest rates, the one where the creditor is a no nonsense or unreasonable person, etc. This means you will have to prioritise how you will pay off your debts and soon enough you will be out of debt.
6. Throw any Excess Cash at Your Debt
While we’re in debt or trying to get out of it we may be fortunate enough to have some extra cash, maybe someone remembered you and sent you money (probably your best case in Nigeria) or like in my case you find some money in your pocket or you get a bonus from work you weren’t expecting or you won a competition or whatever else. It is obvious that when you’re in debt and you get excess money that you should use it to pay toward your debt so that you will be able to be free from the shackles of debt faster.
In conclusion, when it comes to paying off your debt, your mind set matters, so do your habits, what you’re willing to sacrifice and planning. Planning is very essential (See 11 Steps for Creating an Effective Plan).
QOTD: “A man in debt is so far a slave.” – Ralph Waldo Emerson
WELL, THAT’S IT FROM ME GUYS, NOW…
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My name is Ofai and I'm passionate about blogging and it gives me fulfillment that I can help you out so sit back, relax and enjoy your weekly carats of #SelfImprovementGems with me!