Debts are something every person wants to avoid as much as possible. However, it can be inevitable sometimes. Whether it's a small or significant amount, it's something that should not be ignored.

Sasha Jacob, the CEO and President of Jacob Capital Management Inc., says that debt is often the number one reason why most people consult financial advisors. Mr. Jacob is the man behind the pioneer financial and strategic advisory firm in Canada to exclusively focus on the renewable energy sector.

According to Sasha Jacob, if you wish to have a secure financial future, you'll need to make plans and be debt-free first. As you go through these five steps, it's important that you make all the necessary adjustments to your budget to prevent overspending and sliding back into more debts.

Sasha Jacob gives 5 easy steps to get out of debts

1. Eliminate your money borrowing habit.

If you are really determined to get out of debt fast, you have to stop using debt to fund your lifestyle. You need to stop financing furniture, stop signing up for credit cards, stop shopping for unnecessary things if you don't have the cash to pay for. This habit will help you to focus exclusively on the debt that you currently have and wish to get out of.

2. Start establishing an emergency fund little by little.

Why is emergency fund important? It simply helps you pay for bills or fees id an emergency does happen and you don't have a money on the bank. Although most people use credit cards, it may not be the best option if you're in debt. An emergency fund puts a wall between you and your debt.

3. Create a realistic budget plan and stick to it.

Establishing a budget that monitors your income and expenses is important if you plan to be debt-free in a short period of time. It helps you keep an eye on your current financial situation so you can move closer to your goals.

Your budget will help you determine whether you have money leftover/surplus or if you are in the negative/deficit. Your goal should be increasing your surplus which will serve as the money to pay off your debts.

4. Organize your debts.

There are two approaches that you may try. The first one is where you list your debts from the smallest to the largest regardless of the interest rates. This method can help you pay off debts as high as $50,000 within 18 months because it helps you build a momentum. The moment you paid off your smallest debt, you'll be more motivated to pay off the rest of the list.

The second method is called laddering, often used to save you the most money over time. You have to list down your debts starting with the highest interest rate to the lowest interest rate. This method makes most mathematical sense as you will save the most money in interest over time.

5. Throw any extra cash at your debt.

Sasha Jacob suggests using your excess money on your debts. Although it may not be part of your plan, it always helps. Some examples of extra money would usually come from tax refunds, selling a car, an inheritance, winning a bet, and much more. The more cash you throw at your debt, the quicker it disappears.

Sasha Jacob says that if your debt is more serious, consulting a financial advisor would definitely help better. After all, some people fall into debts because they don't know how to handle their finances. Firms such as Jacob Capital Management Inc. works on all areas of the strategic and financial advisory. Find an advisor that specializes in your financial situation and can cater to your needs. Mr. Jacob recommends gathering a number of candidates first before ultimately working with one.

Author's Bio: 

Sasha Jacob is the CEO and President of Jacob Capital Management Inc. He has finished his Master of Laws at the University of Toronto, finished his MBA at Wilfrid Laurier University, and BA, Political Science and Government from Bishop's University. Apart from leading and managing his firm, Sasha Jacob also serves as one of the board members in the Board of Directors of WWF-Canada. He is committed to preserving the Canadian wildlife.