Many people think that debt is not a bad idea; society teaches us that it is just a usual way of making ends meet. 73% percent of Kenyans are living with some form of consumer debt right now.
You cannot create a life you love when you’re in debt. You are forced to live life looking through the rearview mirror because you are chained to stuff in the past. So, how do you get rid of debts?
It all starts with the snowball effect. This is the most effective way to get out of debt.
You list all of your debts, starting from the smallest amount to the largest, regardless of the interest rate. Attack the smallest debts first while making minimum payments on the others. Do this until you pay off your most considerable debt. What this takes is motivation; once you pay off your small debts, motivation comes. Your behavior starts to change.
The second way is to understand your debt.
Most people who find themselves bogged down by debt never really understand exactly how much debt there are in or how much the debt is costing them in interests. You should have a list of the debts you owe and the balances on each of them, including the interest rates.If you start doing this today, that means today is the absolute worst it’s going to get, and every day moving forward will be an improvement.
Once you have determined how much money you owe, you need to start tracking all of your spendings over the next 30 days.
You need to figure out, down to the penny, exactly how much money is coming into your account and then exactly how much is leaving your account. In the moments of your daily activities, you don’t think that the small charges make a big difference in the long run.
Tracking your spendings is an eye-opener so you could know which unnecessary expenditure to cut off.
If you find yourself in a situation where you have a ton of credits, you might want to put all these debts into one.
It becomes easier when you know that you only have one obligation to pay off with a potentially lower interest rate.
If you’ve cut back as much as you possibly can, you’re living off the bare essentials, and you’re still not making enough money to pay off your debts; there’s no way around it.
You need to make extra money. Work more hours, find a second job or even find a side hustle.
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