Introduction
Debt can feel heavy, but there is a way to manage it step by step. A good budget helps you take control of your money, pay off debt, and move towards a better financial future. This guide will show you simple ways to budget and repay debt in a way that is easy to understand and follow.
- Know How Much You Owe
The first step in paying off debt is knowing exactly how much you owe. Make a list of all your debts. Write down:
- Who you owe money to
- How much you owe
- How much you need to pay each month
This list helps you see everything in one place and makes it easier to plan your payments.
- Pay for Needs First, Then Debt, Then Other Things
When you get money, spend it in this order:
- Needs – These are things you cannot live without, like food, rent, and electricity.
- Debt Payments – Paying what you owe is very important so you do not fall behind.
- Other Things – Fun things like eating out or new clothes come last.
If you follow this order, you will always have money for important things first.
- Pay More Than the Minimum When You Can
Many debts have a “minimum payment.” This is the smallest amount you can pay each month. If you only pay the minimum, your debt lasts longer, and you pay more money in interest.
Even adding a little extra—like P50 or P100—can help you pay off debt faster.
- Pay Off One Debt at a Time
If you have many debts, pick one to focus on first. There are two good ways to do this:
- Pay the smallest debt first – When you finish one, it feels good and keeps you motivated.
- Pay the debt with the highest interest first – This saves you the most money over time.
No matter which way you choose, keep paying all your other debts on time too.
Once you finish paying one debt, take the amount you were paying on that debt and add it to the next one. This increases your payment amount and helps you clear the next debt even faster.
- Save a Little for Emergencies
Even when paying off debt, it is important to save a little money for unexpected problems. Even P10 or P20 a week adds up. If you have a small emergency fund, you will not need to borrow more when something happens.
- Look for Ways to Spend Less
Small changes in your daily spending can help you find extra money to pay off debt. Some easy ideas include:
- Cooking at home instead of eating out
- Using public transport instead of taxis when possible
- Buying only what you need at the shop
The money you save can go toward paying your debt faster.
- Stay Patient and Keep Going
Paying off debt takes time. Some months will be easy, and some months will be hard. The most important thing is to keep going. Even small steps move you forward.
Debt does not have to feel impossible. By making a budget, paying what you owe little by little, and being careful with spending, you can take control of your money.
