How to get out of Debt
I recently received an email from a lady that she entitled “Stuck in a rut”.
Hi Francois
I recently found your website and I’m very interested in how I could possibly get out of the situation I am in. I have fallen into a rut. Take out a loan to pay a debt, and so on and so on.
I have made the decision to get out, but how? I don’t have a car or a house to sell.
What would your advice be?
Regards,
Michelle (not her real name)
Perhaps you are also feeling stuck in a rut because you have too much debt. Or maybe you are just tired of living the same life month by month, unable to do the things you really want to, because you have debts to pay.
In either case, don’t despair. You can probably pay off your debt.
This is how.
1. Educate Yourself
Take a few days and read as much as you can about working wisely with money. If you want to get out of debt, knowledge is your biggest friend.
These are the best articles and tips about money on Liberta:
- Financial Freedom Quick Tips
- How to become Financially Free
- What is Financial Freedom?
- The Secret to Financial Freedom
- Stages of Financial Freedom
- Is there such a thing as Good Debt?
2. Have a Support System
Make sure you have some good friends with whom you can share your plan to get out of debt. This is not really to help you with your questions about money. It is to help you stay motivated and encouraged.
This is especially true if you have a family – you’ll have to get them to also buy into the plan to become debt free, and work with you.
If you have regular access to the Internet, you can consider starting your own blog and taking up the Financial Freedom Challenge – a challenge where a group of bloggers support each other on their journeys out of debt and to financial freedom.
3. Create a Budget and Debt Repayment Plan
When you are creating your budget, the first thing you should do is to find the things you spend money on, that you don’t really need. Make a list of everything you spend money on, and cut out the things you can survive without.
Here is a spreadsheet that you can use to help you track your expenses: Expense Tracker Spreadsheet.
You should also consider doing things like:
- move into a cheaper place to live,
- cancel subscriptions to luxury items like DSTV, and
- cancel insurance policies you don’t need.
Use the information about your spending habits to create a budget for yourself.
Use your budget to plan your expenses for the coming months. Your aim should be to spend less money than you earn each month. Then use all the spare cash you have at the end of each month and start paying off your debts.
For most people, it takes between six months and two years to become completely debt free.
If you spend less than you earn and and you have the discipline to stick to your budget, it will take a while, but you will get out of debt!
4. If you are Missing Loan Payments
If you are missing loan payments, the first thing you should do is to contact your creditors and talk to them. They will be much more accommodating if you’re open and honest about your situation.
Tell them that you cannot make your payments and try to negotiate a payment plan with smaller monthly payments, or a delayed payment plan.
If your creditors are not willing to negotiate or talk to you, or you cannot reach an amicable agreement, you can find a debt counselor to help you. However, this should be your last resort.
There’s more to life
If you are currently stuck with too much debt, I pray that you will look for and find the wisdom and discipline you’ll need to pay off your debt.
There really is more to life than to be stuck with debt. The price of debt is freedom. It’s a high price to pay.
May you find freedom!
September 17th, 2008 at 11:22 pm
Francois. Baie goeie advies wat jy hier gee. Wat belangrik is, is dat ons advies moet begin toepas, ‘n plan kry en dit in werking stel.
Ons moet verder nie toelaat dat omstandighede ons verblind oor dit wat God vir ons in stoor het nie.
Ek het sopas ‘n inskrywing gedoen op Nuustak met die inskrywing wat is geloof en hoe werk geloof.
Die kruks is, by God in niks onmoontlik nie, maar ons moet onsself posisioneer na skuldvryheid.
September 17th, 2008 at 11:31 pm
Hi Riaan. Ek dink juis die laaste ruk weer oor geloof, en hoe dit ‘n rol speel in ‘n mens se finansies.
Ek dink die punt is, as jy skuld maak bind jy jouself tot ‘n ooreenkoms om daai skuld terug te moet betaal.
Die logiese gevolg daarvan om skuld te maak is ‘n gebrek aan vryheid.
As die Here jou roep of ‘n geleentheid gee om iets te doen wat hy vir jou beplan het, maar jy het skuld, dan kan jy uitmis op die plan wat die Here vir jou het as gevolg van jou verpligting om jou skuld af te werk.
September 18th, 2008 at 09:02 pm
great post.
September 25th, 2008 at 04:20 am
[...] How to get out of Debt at Liberta – Freedom. [...]
July 10th, 2009 at 10:04 pm
I agree that debt counselling must be one of your last options, but it is better than doing nothing and just waiting for that summons or judgement or sequestration order. There is a place for everything, and if you can not meet your current debt obligations, debt counselling is there as an option. A debt counsellor will negotaite on your behalf with the creditors a payment plan that you can afford to pay each month. All thanks to the NCA. The are not that bad afterall.