Mounting debts can undermine Nigerians’ well-being and even derail their life plans, in this article we share tips on how to get out of debt in Nigeria. The metaphors commonly used in describing it – ‘Gbese’, paints a bleak picture that feels like it will last a lifetime.
Yet not all debt is negative. Good debt, called leverage, is money that you borrow to finance an appreciating investment. Home mortgages usually are good debts since the value of your property tends to increase as your mortgage shrinks. Student loans should fall in this category, if you can earn a college degree and turn that into a job.
It’s the other variety, bad debt, that gives the word a bad name. Bad debt can quickly grow from nuisance to monster. Credit card debt is far and away the most common. Auto loans are a close second. Gambling, vacations and weddings are three more sources of bad debt and credit cards usually get a workout in all three.
Using plastic to make purchases is so easy, and paying the minimum balance each month requires so little effort, that bad debt piles up. Before you know it, interest payments become so huge that you’re spending most of your paycheck on finance charges.
What can you do about it if you get caught in the debt vice? The most important step is to figure out how much you owe and what you can do to eliminate it.
Here are five steps anyone drowning in debt should take to get out of debt:
- Accurately assess the status of your debts from amount owed, to interest charges to expected pay off dates.
- Make a budget. Use it to guide and track spending.
- Create more income. Get a second job.
- Stop borrowing and using credit cards. Cash only.
- Change debt-enabling habits. Drastically reduce dining out, entertainment expenses.
These are all good habits that take time and discipline to put in practice, but each one is a necessary component if you’re serious about eliminating debt