The pressure of debt can be incredibly overwhelming and anxiety-inducing. It’s never a nice position to be in, especially if you let it spiral out of control. However, there are always ways to improve your financial situation and you can usually start with a few simple steps. Below are some of the best to get you started.
Get in the habit of budgeting
You probably hear people droning on about budgeting, but it’s for good reason. If you don’t have oversight and control over your money, it will undoubtedly have control over you. Budgeting involves calculating your income and outgoings to get a better picture of your financial situation.
You should be doing this every month so you can see how much you can afford to pay off without incurring more debt elsewhere. There are plenty of free budgeting tools online or you can make one yourself.
Build a little emergency pot
Paying off debt can so often be derailed by surprise bills and unexpected costs that continue to drag you down. These are often unavoidable, so it’s important to give yourself a financial cushion that can cover any payments so you don’t have to inflict more debt on yourself.
Saving isn’t generally advised while you’re in debt because it’s better to pay off high-interest debts first, but building an emergency fund is certainly worth it to help you tackle your debts more reliably.
Simplify your repayments
If you’re managing lots of different debts, repayments can be confusing and hard to keep track of. Luckily, agreements such as debt consolidation loans help to combine all your debts into one so you can focus on one repayment rather than many.
With one balance to focus on, you can see your progress more easily and this is often motivating for people looking to become debt-free. See if you’re eligible today but make sure to read the terms and conditions before you sign anything.
Spend less than you earn
The number one rule that anyone looking to pay off debt and build savings should live by is to spend less than you earn. By doing this, you free up disposable income to make bigger repayments on your debts which means you can pay them off sooner.
Your budget should help to ensure this is happening and, if not, you need to start cutting your spending to reduce your outgoings. Spending less may be difficult, but it’s a sacrifice worth taking to become debt-free.
Remove spending temptation
One of the biggest barriers to getting out of debt is likely your spending habits. To change these patterns, you need to remove temptations that so easily lead to your splashing the cash.
This could be cancelling credit cards once you’ve paid them off, turning down nights out and takeaways or logging out of shopping apps that you can’t get enough of. The more out of mind spending money is, the less you should do it.