PRACTICAL WAY TO GET OUT OF DEBT

Hello,

We have all being in one form of debt. We may have become indebted by favours done us or properties volunteered to us. We may even have been indebted for a few hours, days or months. The most important rules for being indebted can be found here (If you must be indebted, do it right).

This post focuses on the burden of having a debt to pay. If you had read the ‘previous post’ and followed it through, you may have learnt one or two things. If not, this one is for you.

Honestly there is so much online information on getting out of debt that you wonder why people remain in debt. Maybe they need a local (Nigerian) solution to their problem. Not to worry, I will be your guide on this.

If you are married, you need to get your partner involved because it will make it easier to achieve your goal. Most people will say my partner does not bring money to the table so no need to get them involved, but this is not right. The first thing to do is to increase your income. In my case, it was surprising what N20,000 could do for us. We also found that we were working together towards a desired goal so neither of us made unnecessary demands on the other.

This is where the post on ‘cutting cost’ comes in handy. If you had documented your income and expenses for the past month, well done! If not, please do so now.

Dealing with Loans

If you have obligations to anybody or institution, please write out your loan figures and schedule them for faster repayment, this will be possible when you have made the required changes to your expenses as you may find below.

It is suggested that 40-50% of your income should go for debt servicing in order to speed up repayment.

Create a new budget with the balance after deducting the loan percentage and keep it down to minimum, by this budget you should visibly see that your standard of living did not go up. If you have not effected changes that make it seem as if your standard of living has dropped, it means you have not started. In my case, these were the few changes I made:

Moved to a less expensive apartment from an overpriced apartment (saved N400,000 a year)

We became our own domestic staff, dry cleaner and car wash (saved N128,000 a year)

Preparing our own lunch to work and school (saved N134,400 a year)

There were also other savings we had such as re-negotiating our son’s school fees with the school owner, but it wasn’t easy to do anyway.

However we had a certain small sum each month to decide what we wanted to do with it.

As a personal finance consultant, I am eager to help you get out of your debt if you need my help or encouragement, send me an email (pearlokoli@gmail.com) and if you have your own success stories, please share with me.

Do leave me your comments below.

PEARL.