PERSONAL finance expert Sherii Budley, investment advisor at Scotia Investments Jamaica Limited, this week shares with us five additional methods to walk unscathed from a debt trap.
1. BUDGETING
The first step to becoming debt-free is to simply spend less. A budget is an important tool that can help you to effectively manage your inflows and outflows. Doing a budget consistently every month is key to any financial plan, especially when your desire is to pay off your debt. You may also apply the 50/30/20 rule that is a simplified budgeting strategy. Fifty per cent (50%) goes towards needs — for example, housing, utilities, transportation and any other obligations. Thirty per cent (30%) is allotted for your wants — for example, takeout, and subscriptions. Twenty per cent (20%) goes towards your savings. These funds may go into an emergency fund or an investment for your long-term goals — for example, retirement.
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