Are you caught up in the debt trap?

Do you survive on loans and live your entire life servicing different kinds of debt year round?

You’re not alone.

There are many people in your shoes right now but consider yourself lucky because you’re about to find out a lasting solution to this problem.

A debt trap happens when people get indebted, yet they’re unable to earn sufficient money to repay their debts. So, they resort to borrowing more money, i.e. another debt, to pay the initial loan.

In many cases, they are likely to borrow again to settle the second debts and the vicious cycle goes on.

Sounds familiar?

You would also agree that while it is easy to acquire streaks of debts, freeing yourself from debt can be very difficult. In most cases, many people spend their active years servicing loans – and that’s quite sad.

Part of the reasons why people get into serious debt are unemployment, insufficient income, cost of medical bills, lack of savings or depleted savings, children school fees, utilities, on-going project, business funding, and lifestyle choices.

Unfortunately, the loans only create momentary relief – the aftermath is usually very harrowing. The thought of loan repayment alone can give you sleepless nights irrespective of how much you’re owing or the reasons for obtaining such loans.

In some cases, debtors have resorted to fleeing, hiding, and (in worse cases) suicide when they’re not able to meet the repayment terms.

But is there a way to get out of debt without overworking yourself or having to increase your income?

Can you clear off your piled up utility bills without resorting to borrowing?

What about the car loan you took from your workplace? Can you pay those off as well?

If you thought the answer was NO, you’d be wrong. The answer is YES!!!

All you need is a plan and then the discipline to stick to the plan.

It’s not that difficult. Anyone can do it and you can get started right away!

There are actually only 2 steps you need to take to start living a debt-free life and turn your financial situation around completely.

If this sounds like what you’re willing to do, then read on…

Step 1: Master the Art of Money Management

You could easily fall into the habit of overspending when you don’t manage your money well. Arranging your bills and keeping records of your spending both go a long way to affect your finances positively.

Good money management will assist you to determine your cash inflow and outflow and also help you keep track of your spending habits.

One way to improve in the area of money management is to pay your bills regularly instead of always defaulting.

Create a monthly planner for each year starting from the current one. Register the dates of bill payments and keep the bills to be paid in your planner.

This will help you ascertain the recurring bill that you want to shoulder for the month. Make sure the bill with the closest payment date is kept on top of the second one.

List all the recurring bills on a sheet of paper (or spreadsheet) and assign their due dates. Open another page for other bills that aren’t recurrent – say miscellaneous. You must have a file for all receipts if any. Once a payment is made, mark it as paid in your spreadsheet and keep the receipt.

Never mind how frustrating it may seem to be but one thing is sure: it helps you achieve prudency in spending.

Having a record of spending also helps you when you’re undertaking a new project. You would be able to determine right away if your present financial status can carry the weight or not.

Step 2: Figure out Where You Need to Cut Down on Cost


In case you don’t know what your expenditures are for each month, try keeping a record of every receipt for the space of 1 to 3 months. Classify the receipts into things like clothing, groceries, utility bills, airtime, cost of fuel, etc.

Once this is done, try and see if it's possible to cut down on each of the above-mentioned bills. You can do this by taking advantage of discounts and promos and also by buying in bulk.

Another way to cut cost is to conserve energy by reducing the rate of electricity consumption. Turn off all the lights in the morning as you leave for work. You’d agree with me that electricity is quite expensive in this part of the world.

Also, you should ensure that you do more laundry during the day to minimize the use of your dryer. Doing so will not only reduce the energy consumption of the dryer; it will also prolong the life of the dryer.

One reason why people can’t save enough money is that they buy things on impulse even when there is clearly no need for it. Typical examples are those technology gadgets that people buy in order to feel cool about having the latest version in the market.

To put a halt to this, you could impose the 24-hour rule on yourself when you are attracted to an item priced over your means. Allow yourself some time to get into the “do I need it, or do I want it” mindset. Think before you pull out your wallet to buy anything.

That’s fiscal discipline in action.

Sadly, most advertisements in our media today promote spending by equating materialism to happiness. You need to guard yourself against being subconsciously influenced by such advertisements.

The rule of thumb is to only buy what you need (at least for now) and try to cut cost where possible.

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These are the 2 foundational steps to take if you want to break free from the shackles of debt to start living a life of financial freedom.

But that’s not all you need. There are other strategic steps that will take you from being a serial debtor into a debt-free, financially stable individual.

Learn more here: http://www.smartbuynaija.com/debt-freedom/