Paying off debts isn’t easy at all. People who are caught in a vicious cycle of debts are stressed and overwhelmed by them. At first glance, the problem with debt is a problem with low income. People don’t have enough money for necessities, and they are forced to borrow money and take out loans. But the problem is deeper than that because even those who earn hundreds of thousands of rubles are often unable to live within their means. Only they have debts and loans not a hundred to the paycheck, but several hundred thousand (or even millions). The problem, most likely, lies in the human subconsciousness, or, more precisely, in the attitudes that govern our lives. Including financial, forcing us to go into debt again and again.

Change your approach toward finance management

This is one reason why you often grow in debt: there aren’t enough resources to feed everyone who is in debt. But the real reason goes deeper than that: it is right for you to be indebted, so debts don’t make you feel uncomfortable, and you sink deeper and deeper into them. Realize that this attitude toward life is destructive. It destroys you and plunges you into a debt hole every time you seem to get out of another one. Realize the limits of your power: You can’t help the whole world. And some people don’t need help at all – it just makes them even more weak and dependent.

Make a complete list of your debts

From your mortgage to your car loan, to your neighbor’s paycheck to paycheck. All the cards, all the installments, etc. It should be a spreadsheet (in Excel or at least on paper), with the following parameters for each debt: To whom and for what you owe, the real effective interest rate of the loan, minimum monthly payment, and panned payment (this column will remain blank at first, you will fill it in later). Next, you should add up everything you need to pay back. Whatever figure you get, you don’t have to be afraid of it. The important thing is that you have already taken the first step – look into the eyes of the problem.

 Analyze and reduce your expenses

You need to take the time to analyze your expenses and income. If you have outstanding debt, your expenses are likely much higher than your income, and there is no money left over to pay the debt. Maybe you should reduce your expenses on poker online. Avoid unnecessary shopping. Before you go to the store, write a list and stick to it.

Start by paying off small debts

Sort the table by rate, from higher to lower. Among debts with approximately the same rate, the smaller debts should be higher. Prioritizing smaller debts makes psychological sense in the first place: when you see that your efforts are producing results in the form of fewer loans, it will spur your desire to continue the process.

Refuse to take out new loans

No longer borrow money from friends, relatives, acquaintances, and strangers, and don’t use credit card offers from banks. New debts will make your quality of life worse and cause serious damage to the family budget. Paying them off will take longer than you anticipated.

Set new priorities in your spending

If you owe a large amount of money, major purchases will have to be put off. For example, you plan to splurge on vacations, car purchases, holidays, new repairs, and the like. But do you have enough money to remain a decent borrower at the same time and not complicate life with rising interest on payments and penalties? Are these problems worth the trouble of fulfilling your wishes shortly? If the answer is no, you should put those worries to rest and put paying off your debts first.

Make a Loan Repayment Plan

First, the largest loan is repaid, then the second largest, then the third, and so on. The method is good in that each month the size of repayments is reduced, freeing up free money. The disadvantage: you will have to wait for a long time until the first loan is repaid.

Small debts are repaid first, and then the largest ones. This method is good because small loans are easier to “close”, and the borrower is more satisfied with the reduced number of payments. The disadvantage: the final overpayment will be higher. The most expensive loans (i.e., those with the highest interest rate) are repaid first, regardless of their size. This method is the best, based on cost savings. The disadvantage is that the most expensive loan may be the largest, and the monthly payments will not go down fast enough.  

 Learn to distinguish your real needs from those imposed by aggressive advertising.

Always when you’re going to spend a large sum or take out a loan ask yourself two questions: “Can I buy and be satisfied with a less expensive thing?”, “Can I be patient and buy it later, when I have saved the necessary amount?

 Proper planning of expenses and income are very important things to avoid getting bogged down in debt. Getting out of debt is real: it is just important to bring all these tips into practice.