The Essential Guide To Becoming Debt Free
It doesn’t matter whether you are in thousands of pounds worth of debt, whether you are struggling with a payday loan, or whether you have more credit cards than you ever remember applying for, the chances are you want to break free from the shackles of your debt. To get back in the black, you will need to be proactive and solution minded, and be willing to be in it for the long haul. Getting back in the black won’t happen overnight, but follow this guide, and you will be debt free once again.
It’s all too easy when you have financial worries to bury your head in the sand. You can keep making the bare minimum payment every month and not scratching the interest, or you can choose to apply for another credit card to keep the cash flow buoyant. However, this only perpetuates your debt problems. You need to take a step back and work at decreasing your debt and being more of a saver rather than a spender. Read on to find out how you can become debt free.
Make A Plan
Before you get yourself hyperventilating when you come to realise just how much debt you are in, you need to make a plan. To set yourself a budget you need to record every piece of income and expenditure that passes through your hands for a month. At the end of this month you will be able to work out the expenditure that you can shave away from your plan that you can swap for savings. That almond croissant and that mocha latte that you pick up on the way to the office every Friday morning costs £5 a week – that’s over £250 a year – an easy and quick saving to make. Before you know it, you could total up lots of minute savings that could go into four figures.
It goes without saying that you need to forget about your holidays and flashy cars for a little while. Any big ticket item that you would have purchased on credit in the past needs to go on the back burner. You need to knuckle down and make a commitment to save. That means forgetting about the most expensive tickets to the cinema every week and opting to go for the regular seats once a month. While you might be tempted to shun all outings and social events, this cold turkey style will be too difficult to sustain. Instead, just cut down. This way, you can still have things to look forward to every month.
To save money, you might want to seek out cheaper hobbies or look for alternatives to what you already own or take part in. Forget the expensive gym membership and opt for a no frills package instead. Go for the cheaper phone contract and ensure that you venture out to chain restaurants, utilising two for one deals rather than sampling the delights of more gourmet cuisine. When you are debt free, or you can manage your finances more effectively, you can start to explore the finer things again.
Do A Credit Check
There are plenty of free online credit checking tools that you can use to look at your own credit history. If you have never used one before, they are very easy to sign up to, and you’ll receive advice at the end of the process to help boost your rating. A higher rating means you might have better and more favourable loans available to you if you want to consolidate any of your debts. Should you see a debt flag up that you don’t agree with, you can instruct a solicitor to take up these civil disputes on your behalf. If this is a debt that doesn’t belong to you or you’d like to query it, you can do to rectify your credit record.
If you have time to do so, it might be wise to do a spot of side hustling. This doesn’t mean branching into the properrty market or setting up your own investment portfolio. This is impossible without any cash! You need to take a look around you and work out what you haven’t used for the last twelve months. You may have a wardrobe full of clothes, a drawer full of gadgets or some expensive perfume or gifts that you’ve never used. These items that are unwanted by you will be sought after by somebody else. Consider listing these items on eBay and making some extra cash.
There are a few ways you can approach an eBay auction, but the best way is to set no reserve and let the items find their own price. This is effective if you want to sell quickly. Everything finds its value, especially if you describe it effectively and utilise your photo allowance. If you have twelve photos to play with, show the Xbox, the dress or the vintage chair from every angle and ensure that you show it off in its best light. Be honest, write a warts and all description and sell. Before you know it you could have a three or four figure sum to put into savings or to pay off your debts.
The key aspect of shifting the debt is maintaining momentum. If you struggle for the first couple of months and the zeros aren’t falling away, it can be hard to keep your debt repayment mojo. However, if you start well, it can almost become addictive to try and shift the debt faster and faster. Although your debt repayment plan may be a long term initiative, you will still be able to maintain some sort of quality of life because you aren’t going cold turkey or banning anything outright. Before you spend, consider your budget for that week and make sure you don’t go over it. If you want to go out for drinks on a Friday, make savings earlier on in the week. Repaying debt can build up your financial acumen and make you a better saver in the long run.
Becoming debt free isn’t easy. However if you follow this guide and commit to the task, you can live a life back in the black.