The detrimental effects of worrying about debt are well known, but by taking just a few positive steps and assuming control over mounting financial burdens, you can get back on track and turn a problem into an opportunity.
With effective debt management, you can stabilise your credit rating, reduce your monthly outgoings and start enjoying a good night’s sleep again, so take a look at the following tips and see what you can do today to start getting back on your feet.
Don’t be afraid to ask for help
Talking about debt can be embarrassing but Feefo reviews of Financial Wellness Group make it clear that discussing money concerns with a stranger can be easier and more beneficial than sharing with loved ones. Professional debt management companies have heard it all, so there’s no need to feel ashamed about your situation – their team members have been trained to offer a compassionate and pragmatic ear. They are also able to talk you through potential action plans that you might not have considered.
Know who and what you owe
This might sound like an obvious tip, but it’s shockingly easy to get overwhelmed and simply lose track of every pound outstanding. It can be very helpful to set up a rudimentary spreadsheet, listing all of your outstanding debts, the current monthly repayments and settlement figures too. By having these figures in front of you, you can motivate yourself to try and save a few extra pounds every month, in order to get some of the smaller debts paid off and out of your hair. Once they are completed, you can start to focus on the larger accounts.
Don’t adjust your outgoings
If you are determined to get your debts cleared as soon as possible and are making headway by clearing some of your smaller outstanding agreements first, don’t see your former repayment amounts as bonus money. Instead, channel any extra funds from clearing debts into overpaying some of your larger ones or those with the most disadvantageous interest rates. If you have been coping with a certain amount of spending money per month, why try to secure more, when you could just pay more of your debt off?
Cut up the cards you don’t need
Keeping hold of credit or store cards after you’ve paid them off is just a needless temptation. By all means, keep your accounts open — if you really need to — but don’t have a card that you can access and use. Cleared accounts can help to get your credit score in a healthy position, so they can be useful, but you need to be sure that you won’t get into trouble with them. Store cards often come with high interest rates, so if you can live without this season’s drops, maybe cut them up and keep a credit card for non-fashion emergencies.
Create a comprehensive budget
It’s time to make a cup of tea and sit down with your bank statements. The only way to really manage and get on top of your debts is to account for every penny that comes in and goes out each month. If you’re serious about being debt-free, you’ll need to use these figures to budget properly, so be prepared to make some short-term sacrifices for long-term peace of mind.
When you know what your income is every month, subtract your minimum payments and see what you have left. Divide this by four and that’s what you have to live on each week. This is when you can start to enjoy the process, seeing how thrifty you can be. Budget supermarkets, such as Aldi and Lidl are a perfect way to save money on your weekly food bills, and try turning the heating down a degree or two, to see a tangible difference in your energy bills. At the end of the month, whatever you have leftover, put into a separate savings account and watch it grow. You can then pay debts off in one and start seeing a real difference to your financial situation.
Don’t fritter away extras
If you come into any extra or unexpected money, don’t simply spend it without thought. Birthday cash, eBay earnings or selling on preloved websites can all generate valuable extra income that can be used to offset pesky debts that are playing on your mind, so try not to immediately splurge on unnecessary purchases. Pop them in your savings account instead, to top up the ‘lump sum’ fund.
Struggling with debt is not uncommon, despite credit card borrowing on the decline in the UK, but the mental anguish that it causes is hard to overcome. By taking control, being totally honest with yourself and seeking out positive steps, no matter how small, you will find that your situation could improve almost instantly.