5 Helpful Strategies to Get Out of Overwhelming Debt

Overwhelming debt has affected quite a number of people and sometimes we have found ourselves in situations where we have to bear the consequences of other people's debt burden. From people who are in debt as a result of careless spending or reckless lifestyle to the ones with unavoidable situations leaving them with no choice than to borrow. I have seen families sink into debt due to chronic illness that requires a huge medical bill. And those whose business expansion plan failed and had to pay back through their nose.

Whatever situation led you into taking debt, there are strategies you can adopt to be debt free, or lessons you can learn to avoid falling into bad debt.

Why are people getting into debt?

We live in an interesting and a weird economy where inflation is almost 20%. The increase in rent, food and necessities, along with stagnant or decreasing household incomes, has made debt seem unavoidable for some people. Although some people take debt for good reasons such as mortgage loans, business expansion, business cars, etc. others do so for bad reasons like salary advance, starting a new business, or for risky investment.

How debts affect your mind?

Anyone who has acquired even the smallest amount of debt understands just how much it can affect your world. Think about when you owe a friend N50,000 and how it eats at you until you’ve paid them back. When we’re talking about large sums of money owed to banks or fintechs, that weight multiplies. It even gets worse from the stress of dealing with creditors chasing after you with threats to your financial well-being. If your financial well-being is threatened, then your very physical well-being is threatened. These feelings can trigger anxiety, depression and sleep disturbances.

How to devise strategies for getting out of debt

1. Be true to yourself

I know you want to tackle your debt right away, but taking a look at why you’re spending excessively is also necessary. For example, uncontrollable spending may be the result of deeper emotional issues or a lack of discipline (some people can’t do without taking debt), both of which may require that you speak to a therapist. Or you may consider talking with a trusted friend or colleague, joining online communities or in-person support groups, or engaging in one-on-one discussions with a knowledgeable financial expert who can guide you. By using this approach you can overcome the confusion, shame, stress and anxiety surrounding your financial situation and be empowered to take control of your finances.

2. Create a budget

If you don’t have a budget, you may not know if you are spending more than you make. The 50/30/20 rule is a budgeting strategy that allocates 50 percent of your income to must-haves or essentials, 30 percent to wants and 20 percent to savings.

You can download apps such as Inflow, Expensify or Mint to track your expenses and budget correctly.

3. Get additional income via side hustles

Cutting your budget is great, but there’s only so much you can cut. Consider any skill you have such as graphic design, social media management, copywriting, etc. that you can offer to earn extra cash. There are also side jobs you can pick up from dropshipping, affiliate marketing, etc. Recently, two experts shared some side-hustle ideas during our weekly webinars. You can subscribe here to learn how you can be part of the community.

4. Avoid impulsive buying

Impulse buying happens anytime you purchase something you didn’t plan for. If it’s not planned for in your budget ahead of time, it’s an impulse purchase. Impulse shopping happens sometimes when we are bored and you are while scrolling through the apps. One way to overcome this is to give yourself a day or two to calm down on the excitement. Once you have a cool head and a fresh perspective, ask yourself if you’ll actually use what you intend to buy and if you can genuinely afford it without a strain.

5. Adopt a debt repayment strategy

You can either pay more than the monthly minimum or use the debt snowball approach which allows you to prioritise your loans by focusing on the smallest one first. You can also adopt the debt avalanche method where you prioritise debts with the highest amount before setting off the smaller ones. Alternatively, you can decide to automate your repayment. Automating your repayments is an easy way to make sure your debts are being paid to help you avoid racking up additional costs in late fees.

Whatever your strategy is, remember that you’re not alone and that your debt does not define you.

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