2020 has been a difficult year for many, and now that you are entering the last quarter of the year, you may be taking a closer look at your personal finances. If you are looking for ways to achieve a better financial position before the end of 2020, there is still time. We have three months left and, as we all know, 2020 is capable of producing anything.
There is 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 must spend less money than you are contributing. Budgets help you plan your monthly expenses and determine how much you have left at the end of the month to spend, reinvest, or pay off debt.
But having a budget is not enough. You have to use that budget and monitor your financial activity throughout the month or the actual budget will be practically useless. So, regularly monitor your financial activity throughout the month and if you find that you are getting close to your budget, then it allows you to cut down on your expenses and make sure you have money left over at the end of the month to do what you should with it.
2. Reduce unnecessary costs and / or generate more money
It is always the first instinct to cut costs, to make sure you are saving money. This is a great strategy, but another great strategy to consider is making more money. If you are an entrepreneur, have you considered raising prices or adding new offers to the mix?
Another consideration is getting more money at the door by starting a side hustle or selling items around the house that you no longer use.
Having debt is expensive, so the best way to save money is to be debt free.
3. Reduce debt burden costs.
If you have high interest debt, such as payday loans (the highest) or high interest rates on credit cards, you should prioritize paying off the most expensive debt first. The average credit card costs around 20% interest rate, which is very high. If you can change it to a lower interest charge while you pay off your debt.
4. make a debt payment plan
Lowering your debt costs is not enough. The best and fastest way to achieve financial freedom is to pay off that debt. Create a debt repayment plan that estimates how long it will take to pay off the debt. Find ways to stay motivated to pay off that debt. You could try to keep track of your debt repayment goals and reward yourself non-monetarily for every milestone you achieve. Staying motivated during the debt repayment process is key because it can feel like a lengthy battle at times.
5. Do the best you can
It has been a difficult 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 got rich while in debt. Having debt costs money and weighs on you. So get out of debt and then start building your net worth. Net worth is what makes people rich.