Working Towards a Debt free life

My plans towards a Debt Free Life :Debt can be a really downer, at the end of the month the amount of money that goes to paying of your debt is more than your salary and you have to acquire more debt for you to survive the coming month.

Before I got employed I remember saying that I will NEVER take a loan and will NEVER get  into debt, but right now am drowning. The year has ended and I intend to reduce the amount of debt I have or at least pay off all of it by the end of the year 2016.

While looking for Methods that I can use to be debt free I have stumbled upon several on monitoring your spending and putting all the extra amount into an emergency fund and debt payment, some on snowballing your repayments i.e. paying off your least debt first while others on paying of the debts with highest interest rate first. All these methods have worked for different people, I just have to decide on one that will work for me.

Debt Categorisation: Categorise all your debts in a notebook; indicating the amount of debt that you have , the interest rate and the minimum repayment amount.

This will help in, the order of repayment your will choose i.e. (Snowball or High Interest rate)

Calculate the amount of money that you can spare every month; At first you may have very little to spare, but little is better than nothing.

Your calculations should include the amount of money you get, your monthly deduction (rent, food, transport) and also the minimum amount of money you need to repay.

After finalising the calculations the extra amount should go to debt repayment.

I will use the snowball Method and clear the least amount of debt first, then concentrate on the next loan on my list  while placing the minimum payments + the excess amount into clearing the specific debt

I hope I will be strong enough to stick to a budget, and put all the extra amount into my emergency fund and debt repayment, so that i can attain the Debt free life that I crave.

BTW: Just found out that other than the Ksh 5,000 penalty you get from HELB  for  lack of payment there is also an interest rate of 4%pm that is charged on the loan. Apparently I now owe Ksh 156,724 and not Ksh 108, 000 as I had calculated






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