Unlocking Financial Freedom: Three Tips to Crush Debt

Writer: ABHULIMHEN THERESA

In our world today, dealing with debt is something many of us encounter. But there’s hope – with the right strategies, you can grab hold of the reins, open doors to financial security, and inch closer to a life free from debt’s burden.

Gaining a Broader Perspective: Examining Debt More Closely

You’re not alone if debt feels like a puzzle. On average, Nigerian adults carry over ₦217,136.00 in debt per individual – a figure that emphasizes the importance of addressing debt proactively. A sudden medical bill or unexpected expense can easily throw us off balance, leaving us in financial limbo.

The Ripple Effect of Debt: Finding Balance in Your Finances

The endless cycle of monthly payments can shake our other financial goals – from building an emergency fund to planning that long-awaited vacation or securing our retirement. The secret lies in steady progress. A little upfront organization, combined with a strategy that suits your wallet and preferences, can make a world of difference.

Here are Some Empowering Steps to Map Your Way Out of Debt:

1. Sorting Out Your Debts

Before you set sail on your debt repayment journey, it’s time to take stock of what’s on your plate. Create a list that spills the details for each debt:

Name/account
Type of debt (credit card, student loan, and more)
Amount still owed
Interest rate (some debts are pricier)
Payment terms and duration
Minimum payment due every month

2. Calculating Your Repayment Potential

Explore your budget:

Calculate your essential expenses (rent, insurance, groceries, utilities)
Add up your current monthly debt payments
Find chances to trim unnecessary spending
Identify those extra bits of income (tax refunds, side gigs)
Engage with the 50/30/20 rule, which divides your income as follows: 50% for needs like rent, groceries, and bills; 30% for wants like eating out and hobbies; and 20% for savings or debt repayment.

3. Creating Your Personalized Debt Payback Plan

Your journey to repaying debt should be uniquely yours. Consider three trusty strategies:

Snowball Method: Begin with the smaller debts for quick wins and a confidence boost.
Avalanche Method: Tackle debts with higher interest rates first to cut down on overall interest.
Consolidation: Merge various debts into one for potentially lower interest and smoother payments.

Celebrate Progress: Embrace the Journey

Not all debt is negative; certain loans boost credit or achieve homeownership goals. Celebrate payments and milestones, shedding needless interest. Amid transformation, ponder, “How can I master finances and overcome debt for a stable future?”

So, seize this moment, empower yourself, and witness your financial growth.\

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