Do you think you can achieve debt freedom while we are in the midst of a crisis?
Yes, you can! It will be hard, that’s for sure. But if you have enough determination, you can accomplish anything that you set your mind to.
With the growing debt levels of Americans, a lot of people will need to find the determination to pay off all their debts. According to reports, the total household debt grew by $155 billion during the first quarter of 2020 alone. The total debt balance is now $1.6 trillion more than the peak debt during the 3rd quarter of 2008.
Back then, it was already a huge struggle to get out of debt. Imagine how difficult it would be right now? We are not just facing the recession. We still have the coronavirus to deal with. Unemployment continues to climb as companies fail to recover after the lockdowns. Without a source of income, people won’t be able to pay for their needs, much less their debts. How can they achieve debt freedom? Where will they get the money?
How to achieve debt freedom despite the financial crisis
According to one survey, more than half of Americans feel anxious about their current financial situation. And guess what the top reason is? Debt. 37% of those who said they were feeling anxious admitted that it was their debt that caused them to worry the most.
The truth is, it will be hard to pay off your debts while you are trying to survive the financial crisis. But with the right guidance and tips, it’s possible to achieve debt freedom regardless of how difficult the circumstances may be.
Here are some of the tips that you can use to help yourself achieve debt freedom.
The first that you have to do is to make a commitment to act immediately. Debt is one of the things that will only get worse the more you ignore it. So if you want to keep debt from destroying your finances, you have to decide to act on it right now. It doesn’t have to be a grand gesture. Even if you are too busy to work on it, all you have to do is to take small steps. You can start by studying your budget plan one day. Then the next day, gather the details of your debts. The day after, research the debt relief options that you can pursue.
Make sure that every day there is progress. Even if it’s just a small one, it will still take you one step closer to debt freedom.
Stop using credit
You should also make a decision to stop using credit. Don’t worry because this will only be temporary. You just have to make sure that you have gotten your debts under control. You still need to use debt if you want to maintain a good credit score. But only when you are debt-free.
You may be wondering – how can you be free from debt if you still use it? The thing is, true debt freedom doesn’t mean you won’t use it. In fact, it means you can continue to use it but it will never be in a position that will control your finances. Because if you have a lot of debts, that’s what it can do. It can control your financial decisions and limit what you can do. So if you want it to stop controlling your finances, then stop using credit for now – until you have learned how to manage it properly.
Review your debt solution
Your debt solution is an important part of your journey towards debt freedom. It will determine if it will make your journey difficult or so much easier. What you have to realize is that all the debt relief options are effective. But there is usually one program that is perfect for your financial situation and the type of debts that you owe. You have to find that. So do thorough research of all your options so you can make a smart decision about how you will try to achieve debt freedom. Decide if you want to get a professional to help you. If you want to focus on surviving the crisis, it might be worth it to get a debt expert to help you out. Just make sure that the help you will get is trustworthy and reliable.
Secure your finances
Finally, you should try to secure your finances to help yourself achieve debt freedom. Financial security means your personal finances are strong enough to withstand any crisis. So how do you do this?
Start with an emergency fund. You want to have a reserve fund that will give you the means to spend on what you need to survive. This can be very helpful when your income is compromised. Or if you encounter an emergency that might compromise your budget or debt payments. Instead of being forced to rely on credit, you can use your savings to pay for your needs.
You should also try to find another source of income. Having more than one income stream will give you more security. In case you lose your primary job, you will not be left completely without a cash flow.
Use these four tips to help secure your finances so you can continue to reach for debt freedom even if you are in the middle of a crisis.
2 tips to increase your payments for faster debt freedom
While the tips mentioned above will make your debt relief efforts easier, you still need to make sure that you have enough debt payments each month. And if you want to get out of debt faster, you have to increase your monthly payments. When you increase your payments, you can remove bigger chunks of your balance. That will not just make you pay off debt faster, it will also help lower the interest amount that you have to pay for the whole debt.
So how can you increase your monthly payments? There are two things that you can do.
Lower your expenses
The first is to lower your expenses. Take a look at your budget plan and see how you can lower household spending significantly. The more debts you have, the more drastic the changes should be. See what expenses you can stop spending on for now. There are discretionary expenses like eating out or another entertainment spending that you can forego for now. Hold off your plans to travel, buy new clothes, and other things that you don’t really need to survive. Make sure that until you have decreased your debts, you will focus only on the expenses that are necessary.
Diversify your income
Another thing that you can do is to diversify your income. Don’t just rely on one income. If you really want to achieve debt freedom, you have to work on securing your finances. In case something happens and you lose your job, you can rely on another source of income. Not only that, but this will give you extra cash flow that will help you increase your monthly debt payments. The more you can pay towards your debts, the faster you can achieve freedom from your debts.