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2020 has been a hard year for many, and as you are now entering the last quarter of the year, you may be having a closer look at their personal finances. If you are looking for ways to get into a better financial position before the end of 2020, there’s still time. We have three months left and as we all know, 2020 is capable of producing anything.
There’s still time to turn 2020 around and end it in a better financial position.
Top 5 strategies to eliminate your debt:
1. Create and follow a budget
Budgets are a great tool to help you live within your means. To live within your means, you need to be spending less money than what you are bringing in. Budgets help you plan your monthly expenses and determine how much you have leftover at the end of the month to either spend, reinvest, or pay off debt.
But having a budget isn’t enough. You need to use that budget and monitor your financial activity throughout the month or the actual budget will pretty much be useless. So regularly monitor your financial activity throughout the month and if you find you are getting close to your budget then it allows you to pull back your spending and ensure you have money left over at the end of the month to do as you should with it.
2. Cut unnecessary costs and/or bring in more money
It’s always the first instinct to cut expenses, ensure that you are saving money. This is a great strategy, but another great strategy to consider is to make more money. If you’re an entrepreneur have you considered raising prices or adding new offers to the mix?
Another consideration is to get more money in the door by starting a side hustle or selling items around the house that you no longer use.
Carrying debt is expensive so the best way to save your money is to be debt-free.
3. Reduce the debt carrying costs
If you are carrying high-interest debt such as payday loans (the highest) or expensive credit card interest rates, you need to make it a priority to pay off the most expensive debt first. The average credit card costs about 20% interest rate which is very high. If you can move it to a lower interest charge while you are paying off your debt.
4. Make a debt repayment plan
It’s not enough to lower your debt costs. The best and quickest way to financial freedom is to pay off that debt. Put together a debt repayment plan that calculates how long it will take you to pay off the debt. Find ways to stay motivated to pay off that debt. You could try tracking your debt repayment goals and rewarding yourself in non-monetary ways for each milestone that you achieve. Keeping your motivation up during the debt repayment process is key because it can feel like a lengthy battle at times.
5. Do the best you can
It’s been a hard year, and there have been many unexpected financial surprises this year in terms of layoffs and a poor economy. You have no control over these external factors, so be kind to yourself and adjust to them as best you can.
The bottom line is to achieve the financial goals you need to get out of debt. Nobody ever got rich while being in debt. Carrying debt costs money and weighs you down. So get out of debt then start building your net worth. Net worth is what makes people rich.