The key to gaining financial independence is understanding that it will take time. If debts could be paid off all at once, everyone would be doing it.
Debt repayment requires discipline over long periods of time, consistency, and no small amount of determination to ensure that you meet your financial obligations and eventually walk away with the knowledge that you have earned your financial freedom.
Here’s some advice to help you time your financial independence in a responsible and realistic manner.
Set Realistic Time Frames
The first thing you have to know and accept upfront are the realistic time implications involved in repaying your debts. To do this, you will need to assess your debt load, which involves a thorough evaluation of your current debt situation, including all amounts owed, their interest rates, and your current monthly capacity to repay those installments. Without such an assessment, it will be impossible to set realistic time frames so that you can wrap your head around how long all of this will take.
To not become overwhelmed by the time frames that you have drawn up, break down your debt repayment journey into achievable milestones. Aiming for a single, large, and distant goal can feel overwhelming, so it is a good idea to set smaller and more manageable targets that allow you the opportunity to celebrate each milestone and remain motivated as you make incremental progress towards financial freedom.
When planning, be sure to take into account external factors that could impact your time frame. This might include changes in income, unexpected expenses, and macroeconomic conditions beyond your control. Build these into your time frame so that you have some flexibility in your plan that allows for certain adjustments without causing a complete derailment of the entire process.
Prioritise Your High-Interest Debts
The more costly debts are the ones that are going to take the longest to pay off. These will cost you the most in the end, thanks to the high-interest rates involved. Therefore, they should be prioritised and tackled first to minimise your overall interest burden and reduce your total debt burden as quickly as possible.
In this vein, debt consolidation is also worth exploring, as this can help you refinance your high-interest loans into something with a lower interest rate, thereby streamlining your repayments and potentially reducing your overall debt burden. This can allow you to pay it off quicker and in a more affordable manner.
Boosting Your Income & Cutting Your Expenses
If you have opportunities to increase your income through freelancing or doing a side hustle of some kind, then it is worth the extra effort. You will be glad that you spent nights working rather than watching TV for a year in order to cut your debt burden in half.
Career advancement opportunities should also be pursued zealously, as this additional income can significantly speed up your debt repayment capabilities and shorten the amount of time it takes to become financially free. This means working harder and refraining from slacking off.
Any unnecessary expenses that can be cut should be so that you can funnel all that extra financing into your debt repayments and expedite the debt repayment process even further.
Discretionary spending should be the first to go, as funnelling this kind of money into your debt repayments can significantly reduce your obligations and provide you with a much faster timeline for achieving financial independence.
Financial independence can be difficult to achieve. However, with the right help, it can become a reality in time. Get in touch with us at Zero Debt to get assistance in finding your financial independence and becoming debt free.