Disclaimer: This is a contributed blog post as a sequel to my 2018 adulting finance tips series. Enjoy!
Debt can be a weight on your shoulders; it invades your life and can be the cause of stress and worry. With the average household owing upwards of £12,800, not including mortgages and student loans, debt is very real and can seem impossible to pay off. However, there are ways you can manage your debt, pay it off and have a clean slate at the end of it all.
Here are some tips to help you get out of debt and start again.
Manage Your Debt
The first step towards becoming debt free is to get it under control. If you have multiple payments to make each month, it might be easier to pay them all off in one go through a process to consolidate credit card debt. This enables you to clear your debt and just have to manage the on payment and the one interest rate. It doesn’t get rid of your debt straight away, but it does lessen the stress by making it easier to manage.
Another way of keeping on top of your debt – particularly if it is a smaller amount you owe – is to contact a debt management charity like step change. The charity deals with the debater companies and can often negotiate a freeze in interest rates, either temporarily or permanently. You work together to find out how much you can afford to pay each month and the charity splits not equally between the companies. If you deter on a payment, however, the companies have the right to step out of the agreement. Where this process can be a good option for some, it does have a huge negative effect on your credit score. So if this route is for you, you are going to need to work on improving your credit score at the same time.
Regaining Your Credit Score
No matter what your situation is, you should start improving your credit immediately. Don’t wait until your debt has been paid off. In fact, paying off your debt in time will help your credit score. All you need to do is make sure that you are paying your bills on time, don’t try and get new things on finance, and live within your means. If you can’t quite afford to pay for something all in one go, like your car insurance, then break into down into monthly payments, you might end up paying a little more in the long run, but it’s better than getting into debt over.
If you can control its usage, pay for big things you can afford on your credit card, like flight tickets, and immediately pay it off. This can help your credit both at the bank and with your credit card provider. Plus, some credit card companies have a bonus feature where you can earn flight miles when you pay with the card, meaning that you can save money later on.
Cancel Any Unnecessary Subscriptions
Take a look at your outgoings and see which of your bills aren’t necessary; can you cancel your gym membership, or find a cheaper one? Can you simplify your TV package by removing sports out of season, or movies and just use pay-per-view? You will probably see that you’re paying for something you haven’t thought of for years, like a magazine subscription.
Saving money doesn’t have to mean you can’t have some luxuries, but it does mean moderating what you can spend your money on. Start switching take-away night for a new recipe night, or a cinema trip to a home movie night.
Lose Contact With Credit Cards
Once you have paid off and finished with a debt, then say goodbye to that credit card. If you want to keep one for the flight miles, then do, but be 100% sure that you won’t dip into temptation. Even go as far as to give it to someone you trust so that you can’t use it for anything else.
Delete the card details from any online shops you’ve used them in, shred any chequebooks that go with the cards. Obviously, you need to keep some of the paperwork just in case but file them away – out of sight, out of mind.
As someone who still has some debt in my accounts, I find these tips to be extremely useful for myself. It hasn’t been the easiest to clear these evil stuff with the temptation to keep spending being so strong. But with the right mindset, the right mentality, and a good self control, I’m sure I can do it. You can do this too! xx Wendy
Feature image by Freddie Collins.