A wide sector of people seeks to achieve a financial goal in their personal lives, represented by a life free of debt, but it often seems out of reach in light of daily economic challenges. According to a report published by Forbes magazine, this goal can be achieved by following smart and specific financial strategies that allow for debt control and the building of a strong financial foundation.
The report highlights 5 key strategies that serve as a roadmap for anyone who wants to get out of debt and achieve financial stability.
Get out of debt
1- Create a strict budget and stick to it
According to the report, the first step to getting out of debt is setting aside a portion of your income to pay it off regularly:
- Budgeting requires allocating projected income to specific spending and saving categories.
- When facing a deficit in one area, it is important to avoid using the money allocated to pay off debt and try to cover the shortfall from alternative sources.
2- Pay off credit card balances monthly
Credit cards are an effective financial tool when used carefully, but they can cause significant debt when interest accrues, so Forbes recommends the following:
- Pay off the balance in full at the end of each billing cycle to avoid interest costs.
- If it is difficult to control the use of cards, you can temporarily stop using them until your financial situation improves.
3- Choose a thoughtful way to pay off debt
Paying off debt without a strategy can be confusing. The report suggests two common methods:
- The snowball method: Start by paying off small debts to get quick “wins” that boost motivation to keep going.
- The Avalanche Method: Focuses on high-interest debt to minimize overall interest costs.
Both methods are effective, and the choice depends on the individual’s psychological and financial preferences.
4- Spending only on necessities
Overspending on luxuries often leads to the accumulation of debt, and to avoid this, the report recommends
- Focus on buying only what is necessary during the debt repayment period.
- You can allocate a specific budget for some leisure activities provided you stick to it.
5- Increase your income through additional work
Increasing your income can speed up the process of getting out of debt, and it can be achieved by:
- Finding side jobs that don’t interfere with your primary job.
- The extra income can be directed towards covering daily expenses or better yet, debt repayment.
The report emphasizes that getting out of debt is not just an improvement in your financial situation, but a radical lifestyle change that helps build a sustainable financial foundation.