For me, getting into debt is like committing a sin, especially if it’s credit card debt. This is exactly the opposite of achieving financial freedom. My family and I previously experienced a financial crisis and we don’t want to experience that again. But don’t get me wrong as some TaoKes do take advantage of business loans as it helps them grow their businesses faster.
Before we talk about the strategies on how to pay off debt quickly, let me first identify the commonly available loans: —credit card, loan from a private lender, car loan, housing loan, business loan, and loan from a relative or friend.
And before you avail of a loan, make sure to ask the following questions:
- Do I really need it?
- Can I get a low interest rate?
- Can I pay the monthly interest and principal?
- How long can I pay?
- Do I still have excess funds for my other needs after servicing the loan?
If your answers for all five questions are “yes,” then go ahead and avail a loan.
Just be sure to have a plan on how to get out of it quickly. Here are some strategies:
1. Spend less and save more.
Be conscious of your monthly expenses. Make sure that you spend within the budget and if possible, spend less than your budget. That way, there will be more excess funds to pay off your debts. Remember that you want to lower your interest costs. So if you’re paying more than your required monthly principal, you will surely get out of debt quickly.
2. Set up a debt payment plan.
Make a list of all your debts. Identify how much is your balance and also which one charges the highest interest rate. Prioritize the one that charges the highest interest rate.
3. Always be on the lookout for lower interest rates.
Since there is a pandemic, our government has lowered the benchmark rates. You can take advantage of this and consolidate all your debts into one lender for easier monitoring.
Be sure to do all three strategies every month.
Now once you have paid off your debts, you already have the habit of spending less and saving more. Continue doing that and this time, instead of paying interest to the lender, you pay yourself interest by investing your extra cash and making it grow. You’re now well on your way to financial freedom.
About the author
Sheila Ong is a legacy architect. She helps Chinoy families plan and design their financial homes by not only creating a strong financial foundation but also peace of mind, allowing families to do what matters most, which is to have more time to spend with each other. It’s her passion to empower each Chinoy family to create a legacy of love from one generation to the next through proper wealth management. As a naturally shy person, she evolved into becoming a public speaker driven by her advocacy. She has transformed many lives, including the lives of her team of financial advisors and the lives of about 400 families who are now financially secure. Sheila also values family time as she is a full-time mom to her son.
If you want to know more, you may send her an email at email@example.com. For more information, you may also check out her website, https://legacyoflove.info/ and Facebook page, https://www.facebook.com/legacyoflovewithsheila/, and subscribe to her newsletter here.