How to get out of debt quickly in 10 steps

To be financially independent, we must learn how to get out of debt. The first thing is to understand some realities that will not only prevent you from getting into debt again, but will give you a new vision of the economic reality in which we live.

We’ll start by telling you that, believe it or not, there is such a thing as good debt. These are those that, although they generate a cost for you, you actually have that money invested in some asset that generates a higher return than the cost you have to pay.

So we will not explain how to get out of good debts, as these are useful as leverage for a new business, an investment in real estate or to create a new source of income.

Before getting out of debt, keep in mind the following information

First of all, you must understand the economic reality, these are the most important points:

• Right now young adults, between the ages of 18 and 24, are graduating later, so they are starting their careers later, getting married later and having children later….
• In 2009, only 20% of people between the ages of 18 and 24 were unemployed or underemployed, and over the years, this figure has increased to 50% today.
• Add about 5 years or so to get a college degree, plus the thousands of dollars of loans you need to pay for college, and you’re bound to have a problem.
• This economic reality has put the maturity of young adults at an all-time low and their debt at an all-time high.

Now knowing this scenario, you not only need to learn how to get out of debt, but lead a debt-free life in the first place.

How to get out of debt quickly without affecting your lifestyle

The main thing is to get out of the financial hole in which you find yourself, before continuing to think about expenses that do not generate income and are only to pretend that you have an enviable lifestyle.

Here are 7 steps to learn how to get out of debt easily:

Take 30% of your income to cover your debts:

You may as well allocate a larger percentage to pay, the truth is that it doesn’t make sense for you to stop living while you pay off your debts.

It will take you a little longer to pay when you only allocate 30%, but keep in mind that there are other living expenses such as housing, food, family, among others.

It is important that you learn to manage your money very well if you want to get out of debt.

2. Organize your debts in order of interest rates:

Organization is key to pay your debts, so make a list of all your commitments and pay those that imply a higher cost.

Start by paying off the debts that have the highest interest first, this way you will prevent the interest from continuing to accumulate, and your debt from seeming infinite.

3. Don’t just pay interest, make principal payments:

Yes, it’s true, interest rates can be very high at times, but they are not really the source of your financial problems. The problem is that you are not reducing the base on which you are charged interest.

That is, if you owe $100 dollars and are charged interest of $5 dollars a month, and all you pay is the $5 dollars, you will never repay your debt.

Principal payments are the extra money you pay so that the base, i.e. the $100 in the example, is reduced and, therefore, so is the interest.

4. Return your credit cards:

These plastics are actually a double-edged sword, it is true that we can use them as a financing tool; but if you use them to maintain your lifestyle, be certain that you will never learn how to get out of debt .

Credit cards have one of the most expensive interest rates in the market.

5. Avoid interest on late payments by paying on time:

You are already paying considerable interest on your debts, but did you know that if you are late in paying your debts, the interest is much more expensive?

This is known as the late payment interest rate, and it consists of a penalty for delaying the payment of your debts; regardless of whether they are credit card debts, mortgage debts or free investment loans.

6. Consult portfolio purchases:

Portfolio purchases can become a very interesting alternative for you if you are looking to learn how to get out of debt quickly; and this is because you may have debts with different entities, banks or intermediaries. because it is possible that you have debts with different entities, banks or intermediaries.

The purchase of portfolios consists of going to a bank, or financial institution, and selling them all your debt and having them buy your portfolio. That is, they pay all your debts and you agree to pay them at a certain interest rate.

7. Stop going further into debt:

How to get out of debt fast, the answer is simple, stop getting into debt and opening new holes in your pocket.

The power of habits is of utmost importance to achieve your goals. Do you want to stop spending so much and start growing financially? Make changes!

But do not leave this task to your willpower, but rather create and impose new habits that will help you achieve it. For example, when you go out to a shopping mall, don’t take your credit cards with you. If you want to buy something, but it exceeds your limit, set a rule that makes you think about it for 12 hours before making the decision.

Even if you don’t see it, this series of actions and small habits will make a big difference in your financial situation. They will help you solve your question of how to get out of debt quickly.