Paying off debt can be a herculean task, but it brings a great sense of relief once achieved. No matter how much you earn, debt has a way of casting a shadow on your joy and sense of fulfilment.
Getting and staying out of debt is not impossible if you cultivate certain habits. I am excited to share from experience five things I learnt while in debt that eventually got me out of it.
1. Avoid Impulse Buying
I cannot stress this enough. Learning how to keep your impulses in check when it comes to shopping is one habit that will save you from unnecessary debt. When people yield to buying things they do not need, they end up borrowing to pay for the things they need. Therefore, curbing your worst impulses when it comes to shopping is essential.
Create a system that protects you from impulse buying. One handy method is creating a budget at the beginning of the month or just before your income comes in. More important than having a budget is sticking to it. Make up your mind about not going for everything that is trending. Focus on your most critical and essential needs before attending to other financial commitments.
2. Learn To Say No
Similar to the first point, you need to learn to say no to some requests. Nigerian culture is built around shared responsibility, but there should be limits to this especially when it is not symbiotic. Do not try to be a saviour when you need saving yourself. Quit the need to be approved or liked by everyone. That is a burden a debtor simply cannot bear.
Do not try to be a saviour when you need saving yourself.
Do what is best for you, which means prioritizing your debt repayment or staying debt-free. Frivolous hangout, giving loans to family members or friends who are prone to defaulting, paying off other people's bills? All of this and more is a no-no. Say no to any requests that could hurt your finances. Trying to impress people by putting yourself in a dire financial position is unwise, to say the least. Be steadfast in your zeal to live a debt-free life.
3. Small Payments Add Up
One misguided approach to debt repayment is that the amount owed must be paid at once, or in substantial amounts. That mindset keeps people in debt much longer than necessary because it hinders them from making real progress. Most creditors prefer regular periodic payments, no matter how small. It is the reason they would rather lend money to salary earners because their income is steady and predictable, which makes paying back equally steady and predictable.
Making small payments regularly shows your creditor that you are responsible and diligent in your quest to pay off the debt. It also creates trust. No matter how many a promises you make, if your creditor does not see any commitment from you, they will struggle to trust you. This applies to both individual creditors and most corporate lending businesses. It is easier to set aside money regularly to offset your debt than waiting for a huge payday to pay it off all at once. Get started today!
4. Have More Than One Income Stream
Multiple income streams help to cushion new financial burdens as they arise. Most people have things they are passionate about but are yet to explore, and these are the go-to areas when looking for what to do as a side hustle. The financial sense behind finding alternative sources of income is that there is a limit to which you can cut down on your expenses, no matter how disciplined you are. Actively increasing your earning capacity mitigates against having to sacrifice one daily need for another.
There is a limit to which you can cut down on your expenses, no matter how disciplined you are.
Pursue other sources of income by putting to good use other skills you may have. Be deliberate about your side hustle, even if you are a salary earner. These days, most employers encourage it as long as it does not hinder your deliverables. These additional streams of income could be instrumental in your debt repayment plan and living a debt-free life.
5. Pay More Than The Minimum Expected
Another strategy you can adopt in getting out of debt faster is to pay more than the minimum amount expected at any given point in time. You may get an opportunity to do this whenever you experience a higher influx of income than expected or a significantly lower amount of expenses within the timeline of making regular repayments.
Say you are required to pay fifty thousand naira monthly, and you find yourself in a position where you can afford to pay sixty thousand naira in a particular month without it affecting your financial position. I advise you to go ahead and do just that as this could fast-track your repayment completion, as well as increase your creditor's faith in your ability to fulfil your end of the bargain. It can also help pacify your creditor in the future if for any reason you are unable to meet up with regular payments as scheduled down the line.
I hope you find these tips helpful and are able to carve a better financial landscape for yourself and your loved ones now and in many years to come!
ABOUT THE AUTHOR:
Ernest Ademola Ehigie is a Copywriter, Content Developer, Author, Brand Consultant, and Communications Manager with over 5 years in marketing communications. He has written several articles, policy documents, press releases, radio and TV adverts for businesses and organizations. He's the author of the book, "Why You Must Lead" and currently works as a content manager for Detail and Avedia, a leading retail and media consulting firm.
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