8 Steps to Help You Live a Debt-Free Life

Wouldn't it be great if you didn't have any debt?

Not having to worry about parting with X percent of your salary every month just to pay back what you owe.

But unfortunately, it's not possible for everyone, we know right…

There are several reasons why you can be in debt. We won't judge you or talk about them. Instead, we'll talk about steps to help you pay off your debt fast and become free.

Steps to help you pay off your debt

1. Plan ahead 🌱

Without a plan, paying off your debt might be overwhelming.

List your income sources, the debt amount, and your repayment plan. This helps you know exactly how to allocate money towards your loan repayment.

Planning also means writing down the lifestyle changes you’ll need to make in order to pay off your debt. Yes, you'll definitely need some lifestyle adjustments.

Sparkling tip: list your debt and their respective interest rates, and then pay off the ones with the highest interest first.

This will free up more money as you're no longer owing creditors with high interest.

2. Create a budget and stick to it 📝

We all know creating a budget is super easy, but living by it? That’s where all the hard work is and that’s what gets you ahead in becoming debt-free.

We recommend using the 50/30/20 budgeting style to pay off debt. Here’s how it works for debt settlement:

50 percent of your income for essential needs like rent, feeding, and transportation.

30 percent for things that make you happy but you can live without. Now, put this towards settling your debt. Remember, the faster you become debt-free the better.

20 percent for savings. When you are in debt, your focus should be staying debt-free before putting money aside for rainy days.

3. Free yourself from financial pressure 📉

Stop trying to catch up with friends and social trends. Let your family and friends know you're living on a budget and will be making some lifestyle changes.

It doesn't hurt to inform them beforehand.

Learn to say no to invites. The extra money you'd spend at a weekend pool party or midweek beach trip can be used to offset your loans.

4. Reduce your expenses 🚫

Cut out monthly streaming subscriptions, spa visits, gym membership, and other trivial expenses like eating out.

Cooking your meals at home might seem expensive and time-consuming, but it saves you money in the long run.

Find new hobbies like running, drawing, and other means of entertainment that are free so you're not totally lacking fun activities.

5. Let go of unnecessary possessions 👜

When you're in debt, you're better off living a minimal lifestyle.

Do you have three handbags of the different colour? Sell two and use one.

Do you have separate sneakers for running and leisure? Keep one and sell the other.

You can sell these items on Jiji or other local marketplaces. Use the cash that comes from these items towards paying off your debt.

6. Get a raise 💹

One of the reasons you’re in debt in the first place could be because your salary no longer supports your lifestyle. As you reduce your expenses, work on increasing your earning power.

If you’re underpaid at your current job or you believe you're worth more, ask for a raise or look for more rewarding employment.

7. Start a side hustle 💰

You'll pay off your debt faster with increased income.

A side hustle will not magically double your income, but the extra money coming in will help you pay off your debt fast and live the good life you dream of.

8. Seek professional help 👩🏽‍🤝‍👩🏼

Being in debt doesn't only drain your income, it also drains your energy. You may become depressed as you watch your money always go out for settling debts.

Talking to a therapist or a financial advisor will relieve you of this stress. It can also help you stay accountable with your plan.

But, you'll also spend money to get counseling... 🤔

Well, it doesn’t always cost money. For example, you can get free guidance from a trusted friend/colleague or financial advisors within your network.

Why paying off your debt matters

Without debt, you'll have the freedom to spend money on things you enjoy.

The money for debt settlement can be used to invest, save for retirement, or to pursue your dream.

Now what?

Once you're free from the bonds of debt, you'll need to stay away from everything that might lead you back.

You can do this by planning and saving money for expensive things the old you would have taken a loan for. It also means creating a budget and sticking to it.

With Sparkle you can create a savings plan and earn good interest on your savings.

The freedom that comes from living without debt is pleasing. Don't let all your efforts go down the drain by taking on more debt.

Wrapping up

Paying off debt requires proper planning and motivation. You need to be calm to survive the stressful period that lies ahead.

If you've found yourself rolling in debt, we advise you to pause and take a deep breath 😤

Being a debtor isn't the end of the world. By following the steps outlined above, you're already on your way to becoming debt-free and enjoying life to the fullest.

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What do you want to do today?

You decide! Sparkle is a digital bank that gives you freedom, convenience, and simplicity in your everyday life.

Open a personal or business account with Sparkle and see for yourself how digitally simple life can be.

Sparkle…digitally simple