How to Get Rid of Debt for Good

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Little debt can be helpful in achieving some of your goals and keeping your credit score in check. However, when it comes to the point when your debts are giving you a hard time coping up with your finances, it’s obviously time to get rid of them for good. Here’s how.

Build Your Emergency Fund

Of the most common reasons why people end up having too much debt in the first place is the absence of emergency fund. If one thing is certain in life, it’s that emergencies do happen. If your car broke down, you got sick, or lost your job, that’s where your emergency fund comes in to save the day. Too bad many people do not anticipate these things, and then resort to debt as a means to tackle their financial emergencies.


If you’ve already acquired too much debt now and are already struggling, you may argue about paying off your debts first. But what happens when another emergency strikes again? This is why setting up your emergency fund should be prioritised. If you’re cash strapped, you can start little by little. Setting aside even 5% of your income for your emergency fund can go a long way.

List Down All Your Debts From Smallest to Highest

While it may be most logical to get rid of your debts with the highest interest first, famous radio talk show host Dave Ramsey thinks otherwise. He strongly believes that the best way to build momentum is to snowball your debt repayments, in which you start paying off the smallest debt first and pay only the minimum amount to your other creditors. This way, you can add the money previously set aside to pay off the smallest debts to your larger debts. He also argues that people are more likely to commit to debt repayment if they see results quickly, no matter how small.

Reduce Your Monthly Outgoings

Another important point to remember when you’re paying off your debts is to try to spend as minimal as possible, as it will be difficult to set aside money for your debts when you’re not spending below your income.


Start recording your expenses and see where you spend your cash the most. Categorise your spending into food, transportation, utilities, etc. Set a budget for each category, and use the envelope method if necessary. Once the money in a certain envelope is all spent, spending on that category should be stopped until the next paycheque. It is important to set reasonable amounts for each category to make sure you don’t fall short.

Find Another Source of Income

One of the reasons why people fail miserably at debt reduction is because they simply do not earn enough. While many people may argue that it all depends on proper budgeting, sometimes there simply isn’t enough cash to manage. If, despite all your efforts, you still see yourself struggling paycheque after paycheque, then it’s high time to seek another income source. Whether it’s a second job or some simple side gigs here and there, this can help alleviate some of your financial shortfalls at least until you’ve paid back all of your debts.

Seek Professional Help

Lastly, if all else fails, maybe you simply have to accept that your debt problems have reached to the point that you can no longer manage them by yourself. Do not be ashamed, because a lot of us have dealt with financial troubles from time to time, and it’s not true that your problems are beyond repair. The key here is to acknowledge when professional help is to be called for. Allow the money experts to help you, follow their advice diligently, and then commit not to repeat the same mistakes.

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