Finding yourself in debt can be very overwhelming. The constant pressure of owing money takes a toll both financially and emotionally. However, there are steps you can take to get yourself back on track and regain control of your finances. With some strategic planning and dedication, you can get out of debt and back to a place of financial freedom.
Looking for Work
One of the most effective ways to start chipping away at your debt is to increase your income. Looking for a job, even if it’s part-time or temporary, can give your finances a much-needed boost. The extra money coming in will allow you to put more towards paying off what you owe each month. If you are currently unemployed, looking for work should become your top priority. Speak with recruitment agencies and search job sites daily. Make sure your CV is up-to-date with the help of a CV template. Having a polished CV will give you an advantage over other candidates.
Finding a job, even if it’s not your dream role, has immense benefits beyond the pay cheque. Being employed can improve your sense of self-worth and motivation. Having structure and purpose in your day helps create positive habits. Once you are working again, you can start setting new financial goals for yourself. A job provides a stable base from which you can continue your journey to being debt-free.
Reduce Spending
While boosting your income is paramount to reducing debt, you also need to look at decreasing your outgoings. Reducing spending is key to freeing up more money to pay off debts. Go through all of your regular expenses like utilities, subscriptions, phone bills, etc. Figure out what can be reduced, cancelled, or found for a better price. For example, calling your Internet provider to negotiate a cheaper monthly rate or cancelling any unused gym memberships.
Be ruthless and cut out non-essential expenditures like takeaways and nights out. Avoid using credit cards and only buy necessities like groceries and transportation until your debt is paid off. Meal planning, bagging lunches, and limiting food waste will also help lower your food bills.
Having a detailed budget that tracks where every pound is going is invaluable. This will help identify any problem areas where you might be overspending unnecessarily. Once you have control over your spending, you can put the money saved towards attacking your debt.
Debt Repayment Strategies
There are some strategic methods to approach paying down debt in the quickest, most efficient way possible. One of the most popular is the debt snowball method. This involves listing out all your debts from smallest balance to largest. You then try to pay off the smallest debt first. Once that smallest debt is fully repaid, roll that payment amount into the next smallest. Like a snowball rolling down a hill, as you pay off each balance, the payment toward the next largest grows. This creates motivation and momentum as you see debts being paid off.
Another option is the debt avalanche method, which focuses on paying off the debt with the highest interest rate first, regardless of balance size. This method saves you the most money in interest over time. Make minimum payments on all other debts and put any extra funds towards the highest interest rate balance until it’s gone. Then, move to the next highest rate.
You may also want to consider consolidating debt by taking out a new loan to pay off multiple higher-interest debts. This can potentially lower your monthly payments and interest rates. However, make sure you have a plan to pay off the consolidated loan responsibly.
The key is to pick a structured repayment strategy and stick to it. It may take months or even years, depending on your debt load, but remaining disciplined will pay off tremendously in the end.
Seeking Help
Getting out of debt is not easy, and it’s okay to ask for help along the way. If you are feeling completely overwhelmed, seek advice from a debt counselling organisation. There are several groups that provide free debt advice in the UK. These groups can help you explore options like debt management plans, debt relief orders or individual voluntary arrangements.
Speaking to a financial advisor can also be beneficial. They can review your full financial situation and make customised recommendations to improve it. Close friends or family may be able to provide support as well, whether financially, emotionally, or just as extra motivation.
Getting out from under the burden of debt and regaining financial freedom is challenging but completely achievable. It requires strategic planning, budgeting, and discipline. While the road may be long, having a step-by-step approach makes it much more manageable.
