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"Four things support the world: the learning of the wise, the justice of the great, the prayers of the good, and the valor of the brave."

 

Muhammad
 


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How to Get Out of Debt Quickly

Getting out of debt is not something that is easy, but it is worth putting the effort in, because when you are debt free you will sleep easier, feel less stressed, and be able to enjoy life more. Here are a few tips to help you get out of debt.

1. Prepare a budget:

 
Draw up a budget that tells you where your money goes every week or month. Write out the income that you can count on, and your regular outgoings too. Keep it simple. Make a note of everything that you need to spend, and then live according to that budget. Don't think "I have extra money in the bank, I can spend it", just spend what you budgeted, and save the rest.
 
2. Start an Emergency Fund:
 
 
That money that's left over after you've spent your budget should go in your emergency fund. This is the money that you turn to when things go wrong. If your car breaks down or you need to replace a household appliance, do it out of the emergency fund instead of borrowing money. Try to build up a fund of at least $1000 as quickly as possible. It might take a while to do this, but it's well worth it. Even if you have debts, make a start on an emergency fund and do not touch it unless you absolutely need to.
 
3. Snowball those debts:
 
Make a list of all your debts, and start making the minimum payment on all of them. Pick one debt - either the smallest (so that you can tick it off the list) or the highest interest) so that you can pay the debt down quicker and pay less interest), and put your extra money towards that. When you have paid off the target debt, take the money that was going towards that debt, and put it towards the next debt on your list. Keep doing that until you have paid them all off. If you find things are getting too much then a debt management company can help.
 
4. Stay motivated:
 
Use mental tricks to stay motivated. Work out how long it's going to take to pay off those debts, and tick off the days on a tracker. Imagine what you're going to do with the money you have left over when all the debts are paid. Allocate part of that debt money towards building up that emergency fund, and part of it to treating yourself. Stay focused, and don't spend money outside of your budget.
 
It's not easy to take control of your finances, at first, but once you've done so for a while it will become a habit and you will be far happier overall.
 
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