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Are you in a considerable amount of debt? Do you constantly worry about money that you haven’t got? Well, you are not alone. 80% of Americans are in some form of debt, which means that eight out of ten people have financial worries of some degree or other.
Debt can be like a vicious circle. You can try and solve it, but unless you get to the core of your problems, new debts will emerge. Often, the way that lenders operate, you will always end up paying considerably more for any borrowings than you ever intended and you will never be truly free from the debt.
But of course, it is not impossible to get out of debt. But how do you do it?
In this article, we’ll share some of the best ways to manage your finances so that you can get yourself free from debt.
1. Admit That You Have A Problem With Debt
Before you can do anything to fix your current financial problems, you should, first of all, admit that you have a problem with debt. It can be very easy to bury your head in the sand and try and ignore financial worries, but this will never solve anything.
Admit that your financial problems have become unmanageable and that you are currently powerless to fix them and you’ll be in a position where you will be able to reach out and ask for help.
2. Stop Ignoring Bank Statements And Bills
When bank statements and bills drop into your mailbox, do you ignore the problem and hope it just goes away? Or do you read the statement or bill and address it straight away? If you are ignoring the problem, then you’ll be unlikely to ever deal with them. In fact, by ignoring the issue, you will only make matters worse.
When a bill or a bank statement comes, make sure that you read it and act on it. Take action on your finances straight away instead of ignoring them whether this is making sure that you have enough money to pay a bill, or checking the current balance of your bank account.
3. Get The Help You Need With Your Debt
Once you have admitted that you have a problem with your finances, you can reach out and ask for help.
There are plenty of debt charities out there that will be able to provide expert help to you in your time of need. Get in touch with one and arrange for a free consultation about the debt that you are currently in. They’ll be able to talk you through strategies that are specifically going to work with your existing debts.
4. Evaluate All Of Your Debt And Make Priorities
Not all debt is equal, and you need to know which debts should be a priority. This is the debt that you should look at paying off first.
If you have debt with several different companies, you may have different interest rates. For example, payday loans tend to have higher interest than other loans might, which credit cards often have a higher interest rate than personal loans might.
Evaluate all of your existing debt and prioritize the debt that needs to be cleared first. This is debt that you can pay off more than your minimum payments on.
You should always ensure you keep up with minimum payments on the rest of your debts while you focus your attention on the highest rates.
5. Consolidate Your Debts
If you have several different debts to deal with, then you will have multiple payments coming out. This can be hard to keep on top of and could cause confusion which may lead to missed payments. In addition to this, you may have several different sets of interest to pay. This will end up costing you more than if you had one single loan that totals the same as your debt.
One way around this would be to find installment loans with Wise Loan. By taking out a loan that will pay off all of your existing debt, you will be able to take full control of your debt. You’ll have just one payment to make each month instead of several. You will also have a final end date by which time, all of your debts will be cleared.
6. Look For Balance Transfer Options For Your Credit Card
If you have a credit card that you owe money on, then you’ll find that your minimum payment will only ever cover the interest. That means, that unless you are able to pay more off each month than your minimum payment, then you’ll never get the debt down.
Instead of just treading water with your interest repayments, then you should have a look at transferring the balance of your credit card to a new one.
Many credit card companies offer interest-free balance transfers. This means that you can transfer your debt from one credit card to another and not have to pay any interest on the new card.
Be sure and find out how long it will be before you do start having to repay the interest on that debt and be sure and pay off all of, or as much of the debt as possible before that time. Once you reach that date, if you still owe any money on your credit card, arrange another balance transfer to a new card.
7. Use Your Credit Card Wisely
Credit cards can cause you to get into debt, but they can also be useful. It is worth having a credit card so that you can make major purchases with it. Just be sure that you have the money and can repay your credit card immediately.
Credit cards offer protection which means that if anything goes wrong with your transaction or you are defective goods, you have an additional layer of security and you’ll be able to get a refund from the credit card company.
8. Close Down Any Unused Accounts You May Have
If you have any accounts or credit cards that you no longer use, close them down. Not only is this good for your credit score, but it will also stop you from getting tempted to use the account again and rack up even more debt.
9. Explore Your Outgoings
Go through all of your outgoings. Put them into a spreadsheet and compare your income and expenditure. Go through the last few month’s worth of spending and look for patterns. This will let you know where you are spending too much and what you can cut back on.
10. Cancel Any Subscriptions That You No Longer Need
While going through your expenses identify any products or services that you are paying for that you are not getting the full benefit of. You may have subscriptions to streaming services that you are not making the best use of, or paying for gym memberships that you are not using.
Cancel anything that you’re not using. These small savings can go into paying off your debts.
11. Switch Utility Providers
You may be paying too much for your household services such as your electricity, broadband, cable TV, and phone.
When you sign up for services such as these, you may get some enticing introductory offers. But eventually, these offers will expire and you’ll be left paying much more.
Shop around and see if you can switch to a new provider. Remember, that the great offers that they will entice you in with will expire after a period of time, so you’ll need to look again at switching if the price becomes too high.
12. Create A Budget
If you have budgets in place that cover the different areas of your life, then you will have better control of your finances.
Work out exactly how much your regular outgoings are going to be. Make sure that this includes all of your bills and repayments on debts. Compare this with your total income. Whatever money you have leftover should cover anything else such as your food shopping, travel, and your spending money.
Split up any remaining money realistically and make sure that you have enough money left in your budget to buy food.
13. Look At How You Eat
Often eating and shopping habits contribute to the debt that we find ourselves in. If you’re someone that eats fast food and takeout instead of cooking homemade meals, then it is probable that you will struggle with money worries surrounding your food budget.
You will need to break this habit. Start seeing takeout as a treat rather than having it so often.
Create meal plans. This will mean planning out what you will eat in advance. It will also make shopping at the supermarket easier as you’ll have a very specific shopping list.
Using batch cooking is a great way of ensuring you have low-cost meals that are already prepared for you.
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