Many people bury their head in the sand, choosing to ignore mounting bills and missed payments – this can be incredibly stressful and have a significant impact on happiness, health and wellbeing.
That being said, it’s important to do something about it before it gets out of hand. From my own personal experience, figuring out a solid way to pay back what you owe and getting yourself out of this situation (for good) is extremely liberating and freeing.
Here are my tips for ending the cycle:
1. Consolidate your debt
If you have more than one credit card or loan, the first step is to roll them into one. This way, you just have one debt to pay off each month, rather than having to juggle multiple deadlines. You may also be able to receive a cheaper rate by doing this or your bank may offer a 12-month free interest-free period for rollover balances. Make sure you do your research and find out which bank is going to help you the most.
2. Stop spending
This may sound obvious, but if you’re in a lot of personal debt, you are clearly living outside of your means. You need to change your lifestyle, now. Firstly, take a look at your spending, and write down all your outgoings. Maybe you’re going clothes shopping too much or paying far too much on rent. Whatever it is, these short-term pleasures are actually causing you stress in the long term. Figure out truthfully what you can and can’t afford to do, set a budget, and stick to it.
3. Start a side hustle
Debt can take a long time to pay off, especially if you can only add small deposits monthly. Clearly, the more you earn, the faster it goes down. Once you’ve figured out how much you owe, break it down to see how long it will take to pay off with the minimum payment. Then see how much quicker this could be with extra payments from side hustles. The Australian Government MoneySmart website has some calculators that allow you to easily do these numbers.
Make use of awesome sites such as Uber and Airtasker to start a side hustle without any of the usual associated costs with starting a business. Babysit, sell old clothes on Gumtree or even do odd jobs to make some extra cash. Whatever it takes. By adding this extra money you earn towards paying off your debts, you’ll see them shrink much quicker.
While all these sounds like effort, trust me, it’s so worth every second to see yourself out of personal debt, having won your freedom back.