How to Pay Off Debt

Getting into debt can put you into a vicious cycle of borrowing and paying, especially if you don’t have the skills and vision for personal finance management. While it sometimes can’t be helped but to get into debt during extraneous circumstances, the wrong way to get yourself out of debt is to keep making new ones.

Here are tips to get yourself out of the vicious cycle of debt and begin your financial life with a clean new slate.

Make Cuts Where You Can

Living a lifestyle which can’t be adequately sustained by your income means you’re living beyond your means. Surely, there’s something that you can cut off from your expenses so you can generate money to pay off your debt.

Consider not going out for shopping for a month or two and foregoing expensive entertainment. You might also be able to trim down food and grocery expenses by careful menu planning. You can generate a potentially significant difference just by simplifying your life and focusing on your basic needs.

Increase Income

You can only cut down so much, but you can increase your income indefinitely. Consider working more hours or working on a profitable project on your free time. If you’d like to gain as much money to pay down debt without borrowing, you might also want to sell some of your things and even downsize.

Stop Incurring More Debt

Focus on the current debt and try as much as possible to stop making new ones. If you’re trying to pay your credit card debt fast, don’t open a new account or take cash loans for unreasonable expenses. You’re trying to break your debt cycle and you don’t want to compromise all your previous efforts by getting into another debt.

But what if you should get into debt while paying down debt? Of course this can happen. You or a family member could get sick, lose a job or suffer from other unexpected incidents that force you to borrow money.

While this is the situation that you’re trying to avoid, you should already consider beforehand where you might be able to get the funds quickly. Should you borrow from a family member or opt for cash loans? Will you want to charge your credit card or get another line of credit?

You have to ask these questions mentally because you’re in a very precarious financial situation and the least that you can do is at least develop a game plan for the worst case scenario.

With that taken care of, focus your energy on paying down your current debt. Starting with a fresh clean slate, re-establish your finances with a renewed perspective on personal finance.