Debt is a growing problem across UK. Economic slowdown and rise in living costs, among many other reasons, have led many families to depend on loans to meet expenses. Living with debt is not easy. Neither is finding sufficient money to pay it off. Here we discuss a few steps that can help you take control of your finances and eliminate debt this year.
Commit to cleaning up your debts
Every good intention needs to be backed by a strong commitment. The first step to becoming debt-free is to accept to yourself that you are trapped in debt and firmly resolve to do all you can to come out of it. We understand you are here because you have made this commitment. So, let’s get straight to the next step.
Prioritize your expenses
Budgeting is painful but absolutely necessary when you are fighting debt. Every month, make a list of your income from various sources. Similarly, list out all your expenses like food, tuition, mortgage, etc. Remember that you need to be frugal in your expenses and avoid items that are not necessary. Follow your budget religiously and update your everyday expenses. This way, you will be in better control of your money and may even save some money to start paying off your debt.
Avoid piling up more debt
Be careful with your credit cards and avoid taking cash advances. This only piles up your debt and makes it difficult to pay back. If you own multiple credit cards, move your balances to the one with the least monthly interest. Avoid store cards, overdrafts and new loans as far as possible until you have a good handle on your current debt.
Make the switch
A chunk of household expenses goes towards mortgage and energy bills. See if you can save money by switching your mortgage to another bank. Similarly, compare energy and insurance vendors in your area to see where you can get the best deal. Look for an alternate mobile and internet plan or service provider to save money each month.
Make a debt repayment plan
Once you have some money saved, you can start paying a little extra towards your debts. Analyze your debts to see which are the most critical in terms of consequences of non-payment and work towards eliminating those debts.
If you are unsure of how to handle your debt, consider options given by the government for debt-ridden people or contact a charity that gives free debt counseling like the Citizens Advice. If you wish to work with a debt management company, Home Saving Guide can bring you in touch with reliable and recognized debt management companies. Try our free service.