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Attaining financial freedom is the ultimate financial goal for many people. One of the significant obstacles most people face is debt. Due to economic constraints and financial obligations, many people live from hand to mouth. To go the extra mile to make ends meet, they have to use their credit cards or borrow from banks and other financial institutions. For you to get out of debt, you must have a plan. Here are seven vital steps to guide you into a debt-free life in three years:
Negotiate for a lower interest
One of the ways debt turns into a burden is by letting the interest pile up. Financiers charge different interest rates depending on several variables. When you have maintained a good credit history, you can negotiate for lower interest rates.
Most of the creditors are usually willing to reduce their interest rates to something reasonable. Once you have demonstrated that you are a willing payer, it becomes easier to negotiate your interest rates. It helps you save substantially on the interest charged for the loan.
Make a game plan for credit card debt repayment
Making payments with your credit card can be a good or bad thing, depending on your usage. Due to the convenience they provide, many people find themselves in credit card debt. To be debt-free within three years, you must have a game plan for paying your credit debt back.
Consider using a credit card debt calculator to know how long it will take to clear your credit card debt. Make sure that you do a credit card balance transfer to avoid accruing interest due to late payments.
Use tax refund to pay down debts
There is no short cut to being debt-free but paying off the debt. You can decide to pay off your debt with your savings for you to have peace of mind. For you to be debt-free, you must make smart financial moves.
Many people use their tax refund on a vacation or other luxurious stuff. If you are thriving to live a debt-free life, your tax refund is best used to pay down your debts.
Find out where your money goes
Most financial issues stem from expenditures. Individuals find themselves in debt not because of the amount of money they earn but because of how they spend it. Understanding where your money goes helps you to make the right expenditure decisions.
Take time to note how much you spend on the necessary and unnecessary things. It will guide you to know what you can knock off and use the money to pay off your debt.
Spend your money strategically
Spending your money strategically is the key to clearing your debts. It is critical to have a game plan on spending your money. Invest in short term financial goals to feed into your long term objectives. It helps you in achieving your lofty financial targets.
Work some side hustles
Side hustles have become the most popular way to make some extra money. Take advantage of the skills, talents, and passion you have to make an income-generating part-time gig that can help you cut down your debts.
You may decide for your side hustle to be a short-term or long-term stint depending on your preference. Side hustles help you to make more money to meet your financial needs.
Consider debt consolidation
Most people find themselves in debt, trying to clear one debt with another. This clearing debt method only leads to increased interest rates and a higher debt to pay. The best way to handle various debts is by consolidating them.
Debt consolidation is about rolling several debts into one. Answering one financier gives you peace of mind and makes it easier for you to negotiate on the interest.
The steps mentioned above are critical in helping you to clear your debt in three years. For a debt-free life, ensure to incorporate self-discipline, focus, and determination.