Secrets to Paying Your Debts off and Living Stress-Free

You worry too much about money and that’s the problem!

Financial stress is one of the things that will aggravate all kinds of health problems- there’s adequate research to support this claim- and I am talking about health issues like constant migraines, insomnia, heart disease, and to some extent weight gain, and sometimes weight loss. 

Money problems will rip your relationships apart and it will mess up with your peace of mind. But all that can be stopped by one thing, taking action! Your money needs to work for you, but you have to be bold enough to take the first step which is establishing and following a few smart money moves. But all in all, you have to know that there isn’t really one ‘best way’ that works perfectly for everyone, but there are a few dozen proven strategies that can work for you if you choose to. The more you can apply these strategies, the faster it will be for you to get out of debt.  Too much debt? Try some of these strategies out; 

Confront your debts! Take them heads on!

You need to know how much debt you have accumulated in your life so far. Ignoring this fact will not make your debts go away.

Many people will accumulate most of their debts in their early 2os and they won’t know it until it is too late. Remember, these are the formative years, when we are young and want to live flashy lives. We end up taking more than we can chew, and before long, our debt portfolio is beyond measures. This has to end, and one thing you can do about it is tallying up your debt. These include your auto loans, mortgage loan (If any), student loan debt and credit card loans. In addition, include any other loan you may have taken, and let’s begin the calculations. 

Your Debt to Income ratio

This is one of the most basic calculations, one that will put your debt into perspective relative to how much income you are making. 

The debt to income ratio is often calculated in many ways. If you are a homeowner and you applied for a mortgage, the bank may have calculated your DTI as a percentage of the monthly debt payment of your monthly income. A low DTI means that you are in a good position, that is, there is a good balance between your debt and income. If your DTI is 20%, it means that 20% of your monthly gross income goes to pay your debts each month. 

Your goal is to get the DTI to a lower percentage. Typically, people with lower DTIs are likely to manage their debt payments effectively. That is why many banks and financial institutions favor a lower DTI when issuing loans to a borrower. 

As a rule of thumb, keep your DTI below 43%, it is the highest DTI a person can have and still qualify for significantly big loans, such as a mortgage. But, ideally, most lenders prefer a DTI lower than 36% with no more than 28% of that debt going towards servicing a mortgage or rent payment. Go ahead and calculate your DTI, after you’ve figured out how much you owe, reshuffle your lifestyle!

It is time to change… for good!

Once you have figured out how much debt is attached to you, you need to identify all the behaviors that got you into the ‘debt situation’ in the first place. Getting out of debt means eliminating all the behaviors and the reasons you are in debt in the first place. 

Having too much money will not eliminate your debt, well, it will but on the shorter term. You need to ‘unlearn’ behaviors that get you in debt. Most people get in debt for genuine reasons like school fees, medical bills, a job loss, but a good percentage get in debt for ‘stupidity.’

But do not beat yourself up and the reasons why you got into debt in the first place shouldn’t matter that much, what should matter is what you are doing to get out. Live a life that you can comfortably afford. Well, this is easier said than done but you need to define a ‘comfortable life and then figure out how to get there. 

Earn more to get out of debts

If you are determined to get out of debts, you need to make sure that you are earning enough to survive and to pay your debts. To put it in simple terms, basically, you need to get from the situation where you are spending more than you are earning to a situation where you are earning more than you are spending. 

This works for most people where you know you cannot beat your debt by just cutting your spending. Therefore, the only way out is to earn more than you are earning. To achieve this, get a side hustle, where you are working a high-paying job during the day and another job that you can squeeze some few extra hours for. 

I am not going to lie to you, there are times you will feel like giving up, but you have to work harder. In most cases, second jobs are no fun, but they will help pay the bills. 

Bottom Line

Getting out of debt is a deliberate action that you have to take every day. You will never accomplish anything in life UNLESS you take action. The road to financial freedom is a long and painful one, but you can start today- that’s all that matters.