Anyone who’s ever been in a significant amount of debt will agree that it’s one of the most difficult and stressful experiences you can go through as a person.
The thing about debt is it’s always on your mind because you’re using money on a daily basis and the amount you spend could have a big impact on whether you’ll be able to pay off your bills and debt for the upcoming month. Its takes over your life completely which puts you in a constant state of stress leaving you unable to enjoy the other parts of your life.
That said there are things you can do to help reduce your debt quickly so you can get your life back in order. Below are five ace tips on how you can start reducing your debt.
1) Break the Cycle & Stop Adding Debt
As someone in debt your first step should to be break the cycle of getting into more debt and completely put a stop to adding any more. This alone won’t get rid of your debt but at the same time it won’t increase it either. If you continue to add to your debt while paying off what you already owe you will never see the end of it.
Sort out your spending habits and freeze your credit cards if you have too. Break out of the cycle!
2) Create a Budget
Budgeting is a simple yet effective way to help you manage and control your money. Let’s look at some of the benefits of creating a budget.
- Budgeting gives you better control over your money.
- It will help you in keeping track of how much money you have coming in and going out.
- A budget will help you organise your savings and expenditure.
- It will help you eliminate unnecessary spending.
If you take the time out to create a budget it will no doubt make reducing your debt an easier task as well as giving you more control over your money.
3) Pay off the Bills Costing you the Most First
When you’re in debt with multiple lenders, sometimes things can become very confusing and it can be hard to work out which debts you should start paying off first.
It’s recommended that you pay off the debts that are costing you the most first. It’s simple really, if you pay off the ones that are leaving you out of pocket the most first then you’ll have more money to pay off the rest of your debts later. In addition to this, you may be in debt with lenders or other firms that put up very high interest rates on your debt. In essence all the extra money you pay in the form of interest is wasted money so the quicker you can pay it off, the the more money you will save.
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4) Ask your Lenders for Reduced Interest Rates
As started in the point number 3, if you’re paying high interest rates on your debt then all that extra money going out of your pocket is essentially wasted.
Call your creditors or lenders and try to negotiate a reduced interest rate. Explain your situation to them and see what they can do for you. Even if the reduction is only for a short while, take it and and pay off as much much as you can during this period. It will no doubt help you in your journey to becoming debt free.
5) Stop Indulging in Luxuries & Put Extra Cash into Removing your Debt
If you’re in debt you need to remember that you owe people/firms money and should stop spending your money on luxuries which you simply cannot afford any more. Even if you stop getting your daily £2 coffee every morning, in the space of a month you could save over £40! Other luxuries you should look to put a stop to while you’re in debt include:
- Downgrading or removing your TV/Cable packages altogether.
- Cancel unnecessary subscriptions services like magazines, beauty products, gym (especially if you don’t go any more) and other services you can do without.
- Instead of going to the cinema every week, rent a movie you can watch at home.
- Don’t splash out on days out, spend smartly.
All the extra money you’re saving should put into reducing your debt. If you’re only paying the minimal amount each month you’re going to be paying it for a very long time. Make some sacrifices and get rid of your debt fast so you can get your life back on track.
Being in debt is one of the worst feelings, however by making some tough lifestyle changes and creating a budget you can get back on your feet in no time. We hope our article has provided you with some valuable information on how you can start reducing your debt!