In the current climate, it is more important than ever to look after our money. Many of us have lost income and the future seems very uncertain for most people, so how do you even begin to tackle a seemingly impossible task of getting out of debt?
Getting into debt can be pretty easy, but a lot harder to get out of. Quite often, when we find ourselves in any level of debt it is easier to pretend it is not happening, but of course that only aggravates the situation.
We all have different circumstances, especially with the current pandemic, levels of debt and incomes, so it’s hard to say that there is one way to get out of debt; however, here are some things to consider.
If you are really struggling and need some professional help, you could check out places like Creditfix.co.uk, which can help people get out of debt problems.
List everything you owe and everything you earn
It’s hard to make a plan to get out of debt, without knowing precisely what your money situation looks like right now. As painful as it might be, make a list – and I have a monthly spreasheet – of everything you owe and all of your outgoings, no matter how small.
Then make another list of your income. This will help you see the extent of the problem, and also highlight areas that you could really cut down on. For example, do you have subscriptions to a magazine that you never get around to reading? Do you need a big takeout every week, or could you cut
it down to every other week? What non-essentials could you space out or even stop for a while?
Don’t let your money get swallowed up
It’s so easy to spend a fiver here, or a tenner there on little bits throughout the day – a coffee, a meal deal, a taxi when you’re feeling a little lazy.
If you’re cutting down on luxuries to save money, put that aside to pay off some debt immediately, otherwise, you’re not actually saving anything – you’re just spending it somewhere else! It might not seem like much, but it all adds up and anything you can pay over the minimum is going to make a huge difference.
Planning ahead is a great tool – I plan meals, shop accordingly and batch cook, take money out weekly to stick to a spending budget, not touching cards, for example.
Can you earn a little more?
Maybe you could take on some overtime hours at work, start a side hustle, or simply sell some of your unwanted belongings and put that money towards paying off your debt.
It’s essential to look after your health (mental and physical!) and not do too much, but any little extras you can make and put into the pot is going to help you reduce your debt quicker.
Recently I finally got round to listing some clothes and accessories I didn’t wear and suddenly I had an extra £100.
Lower your interest
When paying towards debt and most of the money is taken up by interest, it can feel as though there is no end in sight. By moving your debt onto an interest-free credit card, you will be making more of a dent in the debt with each payment.
A money transfer can sometimes cost a percentage of the amount you’re moving, even if the card is 0% interest, so factor that in, and these are often promotional rates so they won’t last forever.
I got myself a “cash card” where I transfer the spending money for certain events (drinks, picnics, weekly extra food), so I don’t spend unexpectedly.
Of course, there are many other practical ways to start – and all success stories of people getting out of debt are peppered with some change in behaviour and re-assessment of priorities. They all show a shift in focus and lots of determination.
Don’t be afraid to ask for help, take the first steps, as small as they may feel and keep your end goal in mind.
This piece was written in collaboration with CreditFix.