Feeling like you’re drowning under the weight of debt is a scary situation to be in. The worst of it is that many people feeling crippled by their debts suffer in silence, embarrassed or distressed by their circumstances. When you hear then that the average UK household debt reached a record high of £13,000 this year, it soon becomes apparent that this is a much more widespread issue than you may have otherwise thought.
The other reassuring news to keep in mind is that it’s never too late to start reducing your debt, and that often it’s the smallest, most easily implemented methods that can see the fastest results. Here are a few such ways to get you on your way to being back in the black.
- Create a budget – Step one in any money saving venture should be to identify exactly what your financial situation is. By monitoring your income and outgoings over several weeks, patterns of spending soon emerge and this makes it much easier to budget for all your daily overheads whilst cutting out needless luxuries. These new-found savings can then be used to start alleviating your debts.
- Prioritise – Seeing bills and reminders arrive in an endless stream through the letterbox can make getting debt free seem like an impossible mountain to climb, especially if you feel like you’re making repayments here, there and everywhere without any noticeable dents being made in what’s still owed. If you tackle the greater priority ones first however (those with closer deadlines and higher interest rates), they’ll be eliminated faster than if you take them all on at once. Along a similar vein, it can sometimes be a good idea to pay off some of the smallest debts first, cutting down the otherwise daunting number of envelopes flowing through your door.
- Individual Voluntary Arrangement (IVA) – This is a form of legally binding agreement with your unsecured lenders to pay off all or part of your debt, that essentially sees you make regular, monthly payments through a third party known as an Insolvency Practitioner (IP), who will divide the money up proportionally on your behalf, making the repayment process much simpler for you. As with any monetary contract, there are pros and cons, but you can find all the details about getting an Individual Voluntary Arrangement (IVA) here.
- Generate additional income – Perhaps your day job brings in enough to pay your day-to-day bills but leaves little expendable income to put towards your debts. If this is the case, you could set about trying to bring in additional funds purely for this purpose. There are many ways to do this, from selling off unneeded goods like clothes, furniture, CDs and books, to offering up your skills for a fair price (like tutoring a second language if you speak it or offering lessons if you play a musical instrument).
- Cut down on travel – There was once a time when travel was considered a real luxury and it’s become so commonplace for its conveniences that we sometimes forget how costly it really is. Whether it’s opting to walk or cycle on the daily commute instead of driving or getting busses everywhere, or choosing a staycation or a trip close to home instead of a twice-annual holiday abroad, there are many savings to be made in favour of clearing debts.