Being in debt has never been fun. It is one of the most single-source of depression among people, not only in Kenya but around the world. Truth is, sometimes we just cannot do without debts but if you make it a habit to always be in debt, you will never know peace.
Here are five ways to help you out of financial debt:
Decide to become debt-free
Life is all about choices. One chooses to be in debt and one can choose not to be in debt. Before committing to a debt, ask yourself these questions; do I really need this loan? What is this loan for? How will I pay back this loan? What risks come with this loan?
Although many people dispute this, being in debt is kind of a habit. It is something you get used to because of the short-term conveniences that come with it. Sometimes circumstances force us into debts but when it becomes your way of life, you have to think.
Have a budget
If you do not have a plan, then you are planning to fail. Money is always about budgeting and planning. If you need to live a debt-free life, then the first step is to always budget with the little you have before thinking of other options. Live within your means.
Once you get your money, before spending, take a pen and piece of paper, write down the most important things that you need at that time, indicate the amount against each, then find out the total. If the total is more than the cash, see what you can do without.
Find out what wastes your money
In your household, what things are you spending much money on? Find out if they are necessary. When you go out with friends, how much are you blowing out? Money is about discipline. When you feel the pain of spending, it is time for self-reflection.
There are people who take loans to go on vacations. It is indiscipline to take a loan for leisure. If you can pay back, there is no problem. But if you do that and run into debt, you will have yourself to blame. Be financially disciplined and avoid unnecessary waste.
Save
Saving is a habit. It is something you repeatedly do that eventually becomes part of you. Developing a savings culture is not easy. You have to fight so many things that you are used to saving. The best way to save is to know what you have, and what you can comfortably save.
Am not for the save until you feel pain. No. Saving should not be uncomfortable for you. It should not cause you pain. It should be something you will always look forward to, something you will enjoy doing. An inspiration.
Invest
You may not be earning a lot of money but find something that will at least bring some cash. Invest in something that will form a different stream of cash for you once in a while.
Basic Monthly Budget – Household Expenses List
Budgeting for household expenses is not a simple task, and every family incurs different expenses, which makes the process even more difficult to standardize.
Learn about a list of household expense allocations and find out where to download a free Microsoft Excel monthly budgeting spreadsheet template.
Basic Monthly Budget
The relevant website attempts to make the budgeting process simple by providing an online budgeting calculator that suggests percentage allocations for major household expense categories. Users must simply input a household’s gross income, giving levels, and tax burden. Note: Anyone who does not tithe can simply enter zero in that box.
List of Household Expenses – Standard Family Budgeting Example
Below is the calculator’s list of household expense categories and suggested standard budget percentages for $45,000 annual gross income with a $7,000 tax bill.
- Housing: 36%
- Food: 12%
- Auto: 12%
- Insurance: 5%
- Debt: 5%
- Clothing: 5%
- Savings: 5%
- Medical / Dental: 4%
- Miscellaneous: 5%
- Investments: 5%
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