How To Become Debt-Free As Quickly As Possible

Learning to say NO can make a huge difference to how soon you pay off your debt. Even though it’s hard to control the impulse to buy that gorgeous dress you happened to spot at the store, make sure that you reason with yourself before actually buying it. Ask yourself if you can do without your monthly shopping trips. Teach your kids not to buy more than two toys a month as it might end up affecting your finances. I promise they will understand. Kids are smarter than you think.

As someone who has recently moved to a big city, I sometimes find it hard to say no to friends for movies and dinners because it always ends up disturbing my budget. I usually put a cap on how often I go out with friends and how many times I step out to shop. I must admit that it’s hard to control the urge to shop more often, I have gradually learned to master the art of saying No to myself.

We often don’t realize how we waste many on things that we don’t really need to impress people we don’t like. We impulsively get convinced by friends to go for vacations we can’t really afford or end up spending more than we actually planned to. Sometimes, unplanned expenses take over our financial goals and it’s often too late before we actually happen to realize it. In order to be debt-free tomorrow, you need to make the necessary sacrifices today.

7. Increase your income

It’s important to have money flowing into your bank account to make sure that you pay off your debt on time. Needless to say, your monthly income needs to be more than the monthly instalments that you have to pay to become debt-free.

While recently taking to a friend of mine who had taken a huge loan to fund his education, I realized the importance of side hustles and multiple income streams. The friend I’m referring to works as a trip leader during weekends to be able to fund his monthly expenses and works a 9 to 5 job during the weekdays to be able to pay off his debt. He also invests some of the savings from his trip-leading gig in the stock market to secure his future. Even though he sometimes complains about how busy he feels all the time, he is extremely happy to be nearing his debt repayment goals.

In order to get out of debt as quickly as possible, it’s important to expand your stream of income. Work extra hours until you’ve paid off your debt or pick up a side-hustle to chip in some extra money. This comes with a need to work harder but I promise that it will all be worth it.

Besides expanding the sources of money, you must also keep a track of your income on a regular basis. Be it your salary, tax refunds, cashbacks, dividends, gifts or interest, everything should be noted down on an Income Tracker. Make it a point to save up any extra income to pay off your debt.

8. Build an Emergency Fund

It’s hard to be buried under debt, but it’s even harder to find yourself sitting on zero savings when an emergency hits. It’s extremely important to create an emergency fund to make sure that you have enough money to fund unexpected expenses. This emergency fund will act as a cushion for you and your family during times of uncertainty while also making sure that your debt instalments are paid off regularly.

The urgency to repay your debt shouldn’t rule out the necessity of having an emergency fund for the uncertainties that come along with life. Before you give away every piece of your savings towards debt repayment, make it sure to build an emergency fund for any medical or other family emergency that might arrive. I use a proper Emergency Fund Tracker for this purpose as it helps me keep track of the progress. Having an emergency fund is your financial cushion against the uncertain life and it should be the first thing that you build before starting to repay the debt.

I have a separate bank account that houses my emergency fund. While many people like to put their emergency fund in a jar or invest it in liquid assets, it’s always advisable to keep your emergency fund at a place where it’s safe. If your emergency fund is mostly hard cash, make sure that you invest in a good-quality fireproof home safe to protect your money.

9. Stop obsessing over what your pals are doing

Peer pressure and an associated desire to live a rich life often forces us to make wrong financial decisions. You are randomly scrolling through your social media feed only to catch a glimpse of your old school friend vacationing at an exotic location, and you can’t help but obsess over his life. Well, that’s when you need to learn to let go of your wants and think of spending money on things that you actually need, or you will be driven to a life that might drown you further into a pool of debt. Focus on what you can afford and not what can drive you further into debt.

10. Stop using those Credit Cards

When you are under debt, one of the most useful ways to keep your spending habits in check is to stop using credit card altogether. Credit card comes with an urge to spend money you don’t actually have. Start using cash more often in order to spend wisely. If you don’t have enough cash for what you want to buy, skip or postpone the purchase for a later date when you’ll have cash in your hand.

11. Get a plan together on how you’ll go about repaying your debt

Here comes the part where you need to plan your debt-repayment timeline to get rid of it altogether. The timeline so created is extremely important to keep your progress in check. Remember that with every point on the timeline, you are relieving a bit of stress and walking ahead towards a debt-free life.

Getting out of debt is all about finding courage to keep going. Most of all, you need to stay motivated during your debt repayment journey in order to make it smoother for when you’ll look back at the huge pile of debt you were sitting on yesterday, the fact that you are debt free today will make all the sacrifices worth it.