THE END-OF-YEAR DEBT SYNDROME – 5 Tips

When I woke up this morning and realized 2019 will end in less than 50 days, I almost panicked. First because I am not sure how well I have done with the goals I set in January. The second reason for my panic is because, like most of you, the end-of-year debt syndrome also got me, and I am looking for ways out.

Yes I am in debt. Surprised?

Many times we want everyone to believe we are fine until things get completely out of hand to the point we become publicly embarrassed by our situation. Guys, we all need money, and sometimes we have to make some financial decisions, some of which eventually puts us in a debt situation. Plus, with all the events that happen at the end of the year, the asoebis we have to buy, the wedding gifts, Christmas gifts and all, who wouldn’t get into debt?

I have put together 5 tips that I know will help us all get out of these debts, as we make plans to begin 2020 on a financially healthy note.

Before we delve into these 5 important tips, remember, you are not alone. Debt puts a lot of pressure on our daily lives and finances. It makes us irritable and worked-up. Plus, dealing with debt always seems like an impossible feat, but with conscious and focused effort, ANY debt can be cleared.

These steps will help you gradually move from a state of indebtedness to the point where you become completely debt-free, hopefully before the year ends.

• Classify your debts
• Create a financial plan
• High interest debts first
• Junk sale
• Look towards the future

CLASSIFY THE DEBTS

As overwhelming as handling debt-related issues are, we must brace ourselves and face it squarely. Therefore the first step to taking care of this whole debt thing is facing it. We have wished it away all year and it hasn’t gone, so let’s face it.

It is important to state at this point that not all debts are bad. There are good and bad debts. The litmus test is, “does this debt put money in my pocket?” If it does, then it is a good debt, if it doesn’t, it is a bad debt.

One person’s good debt might be another’s bad debt. A person who buys a car on loan for personal use and someone who buys the same car for commercial use have different debt situations. For the later, the car puts money in his pocket daily, the case isn’t same for the former.

Ultimately, this first step is about knowing your debt as they are. Classify them into good debt and bad debt, then rank your bad debts. The highest being the one with the highest interest rate.

CREATE A FINANCIAL PLAN

It is often said that “if you do not plan, you plan to fail.” This rule applies here too. It is a no-no to just attack debt in a haphazard manner. You will only dissipate your energy. Create a plan, this plan – budget, should cover both your day-to-day expenditure and debt repayment. It is not enough to create this, you must aggressively stick to it for it to work.

HIGHEST INTEREST DEBT FIRST

You have ranked your bad debts then what? This ranking will help you know what to pay first. Most of the pressure we feel about debts is caused by high interest debts (baddest debts). Hence, begin to pay back highest interest debts first. With a financial plan, you can achieve this faster than you expect and sleep better too.

JUNK SALE

I have found decluttering to be a technique that works in every facet of life. To improve your debt situation, you may need to declutter too. So sell your junk. We all have stuffs we haven’t used in a very long time, why not sell it and add the proceeds to your debt repayment fund? Crazy right?

LOOK TOWARDS THE FUTURE

One of the many reasons we remain in debt is because we sometimes never raise our heads high enough to see a future without our troubles. Looking ahead inspires and provides the motivation to push on aggressively towards gaining back control of our finances.

It is however not enough to look ahead, you must back it up with financial plans to ensure you stay out of debt. Every plan must be followed with determination, consistency and focus.

One of the amazing financial steps I took this year is to pay myself every time I receive money from any source. At the end of the year, I will be sharing how that has helped me build my investment fund.

Do you have any tips on how I can deal with my debt situation? Please share in the comment box.