Debt to meet various needs that are not too important will greatly disrupt personal and family finances. Because, with debt, you are required to pay the principal each month plus interest. Not to mention, if you go into debt to buy and pay for things you don’t really need, or often called “hungry eyes”.
Debt has piled up, lots of unused stuff, too. In the end, you’re just wasting your money for no apparent purpose. Health problems such as depression, stress, and psychological pressure can also arise because of the accumulated debt burden.
The above is of course avoided and not wanted by many people. Therefore, you need to get out of the habit of debt that has now become a habit.
Therefore, it is important that we know how to get out of debt and leave the habit of debt.
We have 6 simple ways that can be applied to break the habit of debt. Here is a further explanation for you.
7 Simple Ways to Quit the Habit of Debt
1. Make a List of Income and Expense Every Month
The first step that needs to be taken to stop the habit of debt is to make a list of income and expenses that occur every month. Record all the expenses you incur each month such as buying groceries, transportation, housing, utilities, entertainment costs, and so on.
The thing that must be ensured here is that the amount of expenses you have must be lower than the income you get every month. Having an income that is greater than the total expenditure is an absolute requirement that must be met in order to be free from debt bondage.
2. Create a Budget Every Month
If you already know how much income and expenses you have each month, then the next step is to make a budget. The created budget becomes a tool to control your expenses each month and help you track the flow of money out.
When the problem lies in spending, then you can start improving your shopping habits and learn to save money in the future.
If you’ve limited your spending and there are still problems, it means you need to increase the amount of income you get every month. You can start a side business or take overtime hours to increase the amount of income you get each month.
3. Stopping the habit of debt by not spending excessively
People have a lot of debt, because they are not able to manage the expenses they get every month. The use of credit cards is a trigger that makes it easier for people to go into debt when shopping.
From now on, immediately leave the credit card you have at home. You can shop with cash or use a debit card to limit the amount of excessive spending.
4. Distinguish between needs and wants, and always put needs first
For you shopaholics, these tips are for you. Perhaps, oftentimes you feel like buying all the things you see in offline and online stores. For a moment, everything looks good and there is a desire to have it.
Well, the thing you have to ask yourself is do you really need that stuff? Or do you just want it? If you need something, it means you will find it difficult to continue living if it is not there.
Staple food, electricity, and water, for example. But, if you just want something, whether it’s there or not, you can still live your life as usual and be fine. It is this desire that you must reduce. If later there is money left over, then use it to buy wishes. If not, put your main needs first, and don’t go into debt.
5. Save Funds for Emergency Needs
What people often don’t realize is that many of them rely on debt and credit cards to meet various unexpected expenses. In fact, if you have an emergency fund, you no longer need to go into debt to meet various emergency needs that arise.
The ideal emergency fund amount is 6 times the living expenses you spend each month. You can save money by opening a futures account as described in Tabungan.my.id
6. Find Ways to Add Money to Pay Off Debt
If you are currently mired in accumulated debt, then prioritize spending to immediately pay off the debt you have. There are lots of ways you can add money every month.
For example, you unsubscribe from cable TV that you rarely use, prefer to exercise at home rather than at the gym, or you can also sell various items that are no longer needed.
The more fees that can be removed, the greater the amount of money you can use to pay off your current debt.
The more money you set aside to pay off debt, the faster you will be free from debt bondage. When you are free from debt bondage, then it’s time to improve spending patterns for a better future. You can set aside some of your income to invest in various investment instruments.
7. Prioritize Future Finances
If you are free from debt bondage, it’s time to have priorities and financial goals for the future. Start preparing funds for children’s education funds, paying off houses, renovation costs, and so on. Not only that, you also have to start saving money to prepare an emergency fund.
As we explained earlier, prepare an emergency fund of at least 6 times your monthly living expenses.
Do the Things Above with Discipline
Getting out of debt bondage and starting to get used to saving and investing must be based on the will and discipline to live it.
Do the 6 points that we have conveyed above gradually and continuously. It takes sacrifice and hard work to get out of debt bondage.
The more important thing is that after you get out of debt, start prioritizing various financial goals for the future. You can learn more about how to get out of debt and get out of debt here.