I’m getting out of debt this year. Here’s the plan! – Tayo
By the end of December 2022, I took time to do a review of my finances and I didn’t like what I saw! I was indebted to the tune of nearly five times of my monthly salary.
How did I get here? Well, it didn’t start yesterday. I took a two (2) year loan four years ago because I needed to move out of my parents’ house. The loan was meant to pay the rent and to ‘set up the house’. The loan was spread to be paid over a period of two years, but I got tempted to take a top up on the loan a year later which extended the time I had for the repayment of my loans. Of course, that ate into my income, and I now had to take more loans to meet my everyday needs. Then came the era of loan apps. The loans were quick and convenient, so I wasn’t thinking clearly about interests I was paying on them. I was taking weekly loans and not paying nearly 80% interests.
Needless to say, it was time to stop digging and time to come out of the hole I’d dug. 2023 is the year, and here’s how!
- I’m arranging my loans according to priority: The more expensive the loan is (in terms of interest), the quicker I need it settled. So I’m prioritizing my loans and focusing on settling them accordingly.
- I’m directing all windfalls towards paying off my loans: Whether it’s a gift from a family member/friend, or by some stroke of luck, a lottery winning, as far as it’s not money I’m expecting, I’m using it to pay off one of my loans
- I’ve moved back home: I enjoyed the freedom that living alone gives while it lasted. Rent is a huge part of what takes my money and plunges me deeper into loans. I’ll get my own place again when I can actually afford it.
- I’m cutting back on other expenses: Most of my loans have gone into day-to-day expenses such as food, utilities, etc. This year, I’m doing my best to cut back. I’m packing food from home, reducing my cost of transportation, cutting back on entertainment costs, etc
- I’m starting a side hustle: I’ve always wanted to start something on the side in order to earn more. Well, there’s no better time than now. Since I’m trying to get out of debt, then I’m not in a position to get a business loan. So I’m looking into side hustles like teaching, content creation etc
- I’m investing: Its time to start building financial strength and investing is a great way to do that. I’ve started with my Money Market Fund – a low risk investment which allows me access to my fund and is professionally managed.
If you’re young and living your best life, you may be tempted to take all these loans to live your dream lifestyle. Debt is great when you’re using it for something that will bring you income. But it can also swallow you and put you in terrible financial standing. Can we even begin to talk about the reputational damage it can come with?