Escape the Debt Trap: A 17-Step Strategy to 'Get Out of Debts'

The Debt Trap Is Real — But So Is the Way Out

Once upon a time, there was a beautiful rhythm to your family life, brimming with dreams and grand designs. Your journey began with a long-haul mortgage, followed by loans for your home decor, and perhaps even a shiny new car.

Or for some, it might have been living a simple existence, using credit to satiate ever-growing needs. Before you knew it, you found yourself sinking in a quagmire of debts and you had no clue on how to get out of debts. Days felt like years as bills heaped upon one another.

We understand the struggle of not being able to fulfill your family's hopes due to financial constraint. The repeated pangs of annoyance when your children ask for money can lead to guilt and frustration. The end of every month turns into a wrestling match with your wallet, as you grapple with your increasing debts. While your peers savor a robust lifestyle, you find yourself submerged in a sea of liabilities.

Living in the shadow of debt, it's easy to forego social gatherings and feel lost, unsure of where to turn. The stress mounts, your mind feels paralyzed, and it might seem easier to throw in the towel. But don't let despair dominate! Stand up and face it bravely! Take control of your situation and start implementing these effective strategies now. Your journey to 'get out of debts' begins here, and with determination, you can transform your financial situation from a nightmare into a dream.

Even in this ocean of debts, there's a lifeline. Let's have a look.

How to Get Out of Debts in 17 Steps

1. Accept you are in a debt crisis

Recognize your situation and take necessary actions. List out your interest charges and monthly recurrent bills — this will give you a clear picture of your financial status, crucial for planning to 'get out of debts'.

2. Avoid taking more debts

If you're in debt, refuse more. Getting entangled in more debts will only worsen your situation.

According to the "Association Pour Emprunteurs Abusés" (APEA), three out of four Mauritian households are struggling to pay their debts. Survey data shows that 50% of Mauritian households have contracted loans for property acquisition, while 75% are struggling to pay their monthly dues and 15% are facing severe problems because of over-borrowing.

3. Organise a garage sale

Turn your clutter into cash — sell off things you haven't used in years. Look around your home and you will find many useless items staying idle and occupying space. Sell all metals and scraps, old books, bicycles, tools — you name it.

4. Plan your spending

Create an expense plan and spend judiciously. Always try to spend less than planned — this will allow you to make some savings and make you eligible for paying the debt more easily. Once you plan your expenses it will help you in future to stay on track and save for the future.

5. Try using some online tools

Utilize financial management apps or online tools to monitor your debts and expenses, helping you to 'get out of debts'. There are many applications and online tools on the Internet to help you prepare a budget. If you are an information technology user, why not use these online tools to keep track of your debts and expenses. There are also mobile applications which you carry with you and consult at any time.

Here are some free online tools you can use to monitor your debts and expenses:

• Mint
• Nerdwallet
• Everydollar

6. Review your expenses regularly

Regularly review your list of expenses to eliminate non-essential costs. Any item cut from your list of expenses will save your money. Bottom line: cut all unnecessary spending.

7. Try to stick with your budget

Make a budget and try to stick with it — even try to reduce your budget to save money. The other best way is to earmark part of your budget for debt repayment and keep the remaining slice for household expenses.

8. Involve the family

Try to involve your family in your saving plan. Involve your spouse and your kids in this venture — it's a team effort. Also identify the party who is spendthrift or a compulsive shopper and let the other partner manage the finance. You cannot do it alone. Make sure you have all the support you need to go through this crisis.

9. Go for used products

While you are in debt, opt for second-hand or used items. You can find many interesting things on the web or in newspapers. Save your money and always look for secondary market alternatives when you need to buy a new item.

10. Look for promotional sales and discounts

Be a smart shopper! When you buy groceries or any household items, look for rebates and promotions. Beware of the "buy two get one free" adverts — you end up spending more. Plan your shopping list well in advance before going to malls and do not buy what you do not need. This will help you save money and eventually ease your budget.

11. Consider a part time job

Not able to cut expenses? Boost your income with a part-time job until you 'get out of debts'. Increase your income and pay off your debts easily. This technique is useful for you as you may continue doing the job after paying off all your debts to save money for rainy days.

12. Pay long-term debts first

Prioritize clearing off long-term debts or the ones with higher interests. Long-term loans are costly in terms of interest. Consider making a balloon payment whenever you have any excess funds. This will allow you to cut interest running over 15-20 years. The best tactic is to concentrate on the highest interest paying debts. Alternatively, you may pay the small debts first and then concentrate on the big one later, if this can motivate you.

13. Pay your bills on time

Punctual payments go a long way and avoid extra charges.

14. Never pay a debt with the help of a new debt

Never fuel a debt with a new one. People who do so are just fooling themselves and getting entangled further in the spiral of debts. Don't cut corners and use cheap methods to pay your debts. You do not want to hide in your own home when your friends or debt collectors knock at your door.

15. Show determination

The road to be 'out of debts' is challenging but worthwhile. On the road to recovery, at times you will still need more money. Your car won't stop breaking down or you may bear medical expenses or have to visit a sick relative. Don't let such incidents distract you from your goal. Take it as a test for your commitment, stay firm!

16. Celebrate achievements

Celebrate your achievement whenever a debt is paid; this will give you a warm feeling of relief. That doesn't mean that you should go to five-star restaurants and spend thousands of rupees. Give yourself a treat: buy some cakes and enjoy it with your family.

17. Avoid future debts

Once you 'get out of debts', avoid falling back into the debt trap. Never borrow again and live within your means. Never get back to the old habit of borrowing money. The sooner you deal with your debt issues, the faster you will be on track. Never underestimate the load of debts — it can ruin you. Stay afloat, concentrate on your objectives, make a firm commitment and stick to your plan.

Best of luck to you!

If your debt burden feels overwhelming, speaking with a financial professional can help you build a realistic repayment plan and negotiate with creditors. Contact Anexa Biz for confidential guidance on getting your finances back on track.