9 ways to become debt-free in life

Wouldn’t it be nice if you could finally put an end to your financial woes? To get out of debt, you must have a strategy in place. In some cases, you may be able to quit your job without fear of losing your house or being unable to pay your bills. When it comes to debt, even if you’re adept at avoiding it, it’s always there in the back of your mind. Paying it off means that you can put your money to work for you, and you may begin to accumulate wealth. Let’s take a look at nine ways to become a debt-free in life:

1. Begin with a small amount

If you cut back on dining out, gas, and impulsive purchasing, you can save a lot of money over a lengthy period of time. Since the outbreak of this pandemic, many of us have been able to work from home and save money in this way. Paying off those high-interest debts is the best use of any money left over after paying for necessities such as utilities and a few emergency savings.

2. Re-examine your assumptions on EMIs

There is a prevalent trend among credit card firms to ask for the minimum payment and then charge a hefty interest rate on the remaining debt. Due to their high-interest rates, credit card and personal loan debt should be paid off first. There is nothing in today’s world that can’t be purchased on EMI, from high-ticket luxury things to fashion and technology.

India is famed for its high savings ratio, and our older generation was able to weather many hardships because of their belief in saving and spending wisely. Before making a purchase on EMI or in instalments, it is critical to reflect, plan, and consider. Ask yourself as many questions as you can think of.

3. Find out more about ‘Finance’

Staying at home during the lockdown allows us to save precious daily commuting time, which is a massive advantage in a city like Mumbai. Go over and fine-tune your assets while you’re at home. Analyse your investment portfolio with the advice of a financial advisor. It’s a good idea to review your stock portfolio often, especially when the market is on a roll, to uncover assets that could be used to pay off debt.

4. Think big

History demonstrates that every crisis has a silver lining and has spawned the most innovative business concepts. Now is the moment to improve your skills and advance your career. Finish that online course and get started on your side hustle because adversity may also be an opportunity.

5. Take the help of your advisor

Plan your insurance redemption proceeds toward your debt payment with the advice of your financial advisor. Calculate your payments by comparing the value of your insurance proceeds to the amount you could save by utilising these funds to pay off your obligations, of course, in conjunction with your financial counsellor.

6. Medical coverage

With the advent of this epidemic and the dread of growing hospital expenditures, the health insurance industry has experienced a rise in interest. This is one area where your health insurance premiums will have to remain constant, if not increase. This is not an area where cost-cutting can be explored.

7. Mutual funds

Many factors influence how a person wants to become debt-free, including his income, individual savings, short and long-term goals, and so on. It is feasible to obtain debt-free status by properly arranging your investments and expenses over time. For example, you could invest through a SIP, and the same SIP procedure may be used to allocate specific money for debt repayment. This has shown to be a gradual and consistent method that can be used to take the first step toward debt freedom. We must keep in mind that while a loan moratorium may appear to be a benefit, in the long term, we are only moving our debt from the present to the future.

8. Begin paying off those loans with the highest interest rates

Interest rates on credit cards are typically much higher than those on other types of loans. Paying off your Rs 1 lakh credit card debt at a 24% annual interest rate will save you more money in the long term than repaying a Rs 1 lakh personal loan at a 13% annual interest rate.

9. Commit to a debt-free lifestyle

To avoid slipping back into debt after completing your debt-free journey, you will need to make a firm promise to yourself. It’s a way of preparing for larger expenditures and putting money aside for them. A budget is also required, but the benefits of being debt-free outweigh the drawbacks. Debt-free life provides a sense of liberation that should not be overlooked.