Are you thousands of pounds in debt? It happens to even the best of us, but while you might see no end in sight, it is possible to get out of it. You just have to be strategic, productive and learn to give up some of your luxuries. However, it can be easier said than done, which is why we have compiled some of the best tips into a guide to help you through the entire process.
Want to learn more? Then keep on reading!
- Get motivated and remain productive
- Compile your debt together
- Determine your spending habits
- Create a budget and track spending
- Track your spending
- Find ways to cut your monthly expenses
- Consider getting a second job
- Pay more than the minimum requirement
- Make an emergency fund for the future
The very first step in getting yourself out of debt is to get motivated. Now, this can be difficult, especially when it seems impossible to escape, but you can get through it. Here are a few common tips that are used to stay productive:
- Set goals: Having achievable goals will make it much easier to see progress without overwhelming you.
- Have support: By going through the process with another, you can keep each other motivated while sharing successes.
- Plot progress: There may be times where you don’t meet your goal. Instead of worrying about it and thinking nothing is working, write it down and use it to motivate you further.
Once you are ready to make a change, the next thing you need to do is compile all of your debt together and get a lump sum. This will help you figure out exactly how much you have, and you will be able to generate a savings plan based on your income. The final number may also encourage you further, as many people don’t realize how much they actually owe until they add it together.
To start saving, you need to figure out why you got so into debt in the first place. Did you keep buying things on your credit card without the funds to support it? Are they the result of big loans such a house repayment or education? Did you happen to lose your job and didn’t have enough savings? By finding the root cause, you can develop strategies to minimize falling into the same problem.
The next step is probably one of the most important, and that is creating a budget. This will help you analyze all of your monthly expenses so you can determine precisely how much you can repay each month. You’ll also be able to see where you are overspending and how you should be dividing up your money. It should include everything from your grocery bill, rent, utilities, and subscription services. Take a look at these best budget apps to get started.
A budget is no use unless you track your spending. Each week you need to be writing how much you spent and how much you saved. From that coffee that you bought before work to the yoga class you took. Everything needs to be recorded. Budgets can change, and you won’t be able to create one that works for you until a few weeks of tracking.
If you so far in debt that your regular savings will not get you out, it’s time to live more frugally. You’ll need to find ways to cut down expenses so that money can be put towards repayments. Here are a few different areas and changes you can make:
- Tax – Claim deductible expenses and consider speaking to tax relief services.
- Groceries – Skip the takeaway and cook your own meals. When buying groceries, keep an eye out for what’s in season and use coupons where possible.
- Utilities – Practice turning off lights and taking shorter showers. You may also look into comparing different companies’ prices.
- Transport – Use public transport where possible and carpool with others.
- Subscriptions – Choose one or two subscriptions you can’t live without and cancel the rest.
You can find more ways to cut your monthly costs here.
Are you struggling to cover all of your costs? Why not consider starting a side job so that you can generate a second income? They don’t have to take up a lot of time, and even doing something small, like walking dogs on the weekend, can make a big difference. Just make sure that you aren’t overworking yourself. Taking on too much that you can’t handle can actually make things worse in the long run. Check out these ways to make extra money for some inspiration.
In order to pay off your debt more quickly and reduce interest, it would help if you paid more than the minimum requirement. Even just £20 can add up quickly, so consider putting extra away each week. If you do get a side job (which we discussed above), you may even be able to use what you earn from it instead of having to divide up your regular income.
Finally, in order to avoid falling back into debt in the future, it’s extremely wise to continue saving and putting away money into an emergency fund. This way, if an unexpected expense does occur, you may not have to seek assistance to pay for it. Don’t be afraid to search around for the right account until you find one that works for you. It really is best to be prepared.
And that’s it! This was the ultimate guide to getting out of debt. By following the different steps above, you can undertake the right process to help you out of any stressful financial situation. It all starts with the willingness to make a change.