Living with debt can cause emotional havoc on our day to day lives. The impact of owing money that accumulates day by day thanks to demonstrably harsh interest rates is not to be understated, and we understand the importance of adopting a strategy for dealing with debt. Whether you are interested in debt consolidation loans (which are a great strategy if you have a number of loans or debts in different places) or just need some solid advice, we can help you here. This is the ultimate guide to paying off your debt, so read on to find out a way to get yourself financially free, sooner.
There are two common ways of dealing with debt that are fairly popular today, and they are the practice of paying off smaller debts before working your way up to bigger debts, and paying off debts in order of the highest interest rate first. Of course, consolidating your debts is a way to avoid high and varying interest rates, and something to consider if you have a range of lenders and products. And to help you further we have a third suggestion of managing your debts: the emotional method.
Emotional debt? What’s that?
Think about your biggest debt. Go on, just picture it in your mind. How does it make you feel? Is there a pit in your stomach? A sinking feeling? And are you trying to do anything except think about that debt right now? We thought so.
When you approach your debts you need to think about eliminating the debt which is causing the biggest emotional impact on your life and working your way down. In many cases, people owe money to a bank which can come with a high interest rate. The emotional impact of that debt is significant and it would be pertinent to pay that off first. On the other hand, a person may owe money to a friend, and the idea of the debt has begun to cause a rift in the friendship. In this case it would be worthwhile paying off that debt as quickly as possible in order to repair a friendship.
How to approach your debt
Create a shift in your mindset
The first step is to make the shift towards a debt eradication mentality. Cut up your credit cards. Track your spending. Make a promise to your family. Whatever you do, make a move, and tie some emotion to it. That way it’ll stick around.
List your debts from smallest to largest, including the interest rates
Don’t make things complicated – just list your debts with the name, the amount, the rate of interest. This will come in handy later on.
Focus on the emotion that’s connected to each debt
Starting with the first item on your list just close your eyes and imagine how it would feel to pay it off completely. Think about what you spent the money on, how much of a burden it is on your life, and whether it’s secured or unsecured. Once you have established how you feel, make a note and move on down the list, working out how each item on the list makes you feel. If you start to feel lethargic and a bit worn out that’s a good sign – it means you’re feeling the emotions!
Reorder your list based on the emotion
Now that you have a real list of the emotional debts, start to reorder them based on the emotional impact. How you pay things off is actually arbitrary, and how you feel, and getting some good wins along the way will actually keep you excited about your debt elimination.
Keep up the good work. And before you go getting into a lot of debt again, think about the impact of the lifestyle that you choose to lead, and consider purchases before you commit.
