If you are an average middle class person, in order to get progressing into material success like buying a house, a car or starting a business you probably need a loan.
Debt is imminent when you are not a Kardashian, and it should be o.k if you know how to properly manage debt. If you fail in this single discipline, you might find yourself digging deeper into the hole instead of getting out of it. And you might even loose what you achieved by getting into debt anyways.
But how do you get good at getting out of debt? what does it takes? Well there are easy answers out there, but the first one could be: do not continue to apply for loans. That is the opposite of getting debt. Consolidation loans can be tempting, but if you let your emotions lead the way you are falling into the trap.
Nowadays there are a number of mobile apps that can help you in your journey of making a disciplined financial life. These apps can help you do your budget, and honor it. Mainly because you are aware of your spending at all times and the balance of your bank account is not an imaginary number, but a solid one in your phone.
Here are my favorite apps:
These are supported in all devices, and will help you keep track of your expense. Which is the first step to getting out of debt.
It is important that your budget prioritizes your obligations (debt) in order to reduce them. Despite the common believe, it is best to get out of the smaller debts first than the heavier ones. This can be done by putting a little more effort to get out of the small debts quickly to clear some more budget in order to make bigger payments to the bigger debts. This technique is know as the Snowball effect.
So the first thing you should do right now is to put in a list of your monthly bills, the bills that allow you to have the lifestyle you have. You know things like: electricity, phone, cable, internet. And then be sure to include those small expenses that we often left out like: netflix, spotify, beers? once this is done, put in all your debts and sum it all.
Does your expenses surpass your monthly income? If the answer is yes it is time to do some changes in your lifestyle. Do you really need that netflix account? can you live without spotify? or need those 300MB/s internet connection? You might have to cancel this expenses at least temporarily until you manage to reduce the debt you have. When you do it you give more bandwidth to get out of debt, and if you put in practice the snowball effect this can be done in just a couple of months.
If your expenses do not exceed you income even taking debt into account, then you are in the right track and budget discipline is all you need to get out of debt.
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