Consumer debt is a serious issue throughout the world, but individuals in the UK, in particular, are struggling quite a bit.
In fact, the average UK household owes an average of £15,385 to banks, credit card firms, other types of lenders. That’s the greatest amount of average debt UK households have had in decades.
Does this situation sound familiar to you? Are you tired of being in debt? If so, then this article is for you.
Read on to learn about seven strategies you can use to get out of debt and stay debt-free.
Set and Stick to a Budget
One of the first steps you ought to take if you’re serious about getting out of debt is to create a budget.
Sit down and calculate your monthly expenses. Then, take a look at how much money you have coming in.
Once you have all this information in front of you, create a budget so that every dollar you earn has a job.
Pick Up a Side Hustle
If, after going over your expenses and income, you find that you’re spending more than you earn, you may want to look for ways to boost your income. Picking up a side hustle is a great option if you want or need to bring in extra cash each month.
Consider becoming an Uber or Lyft driver, or try walking dogs or dog sitting using Rover or Wag. There are lots of apps out there these days that make it easy for you to earn additional money on your own terms.
Pay More Than the Minimum
Whenever possible, try to pay more than the minimum on your loan and credit card payments. The sooner you can pay those off, the sooner you’ll be out of debt and the less you’ll have to pay in interest.
Make Extra Payments
If you can’t afford to pay more than the minimum in one payment, consider making multiple payments throughout the month.
If you get paid every two weeks, for example, pay the minimum payment on your credit card twice per month instead of just once.
This might not seem like a lot, but it’ll add up pretty quickly, and you’ll be well on your way to paying off your debt in half the time it would have taken you otherwise.
Of course, when you’re going over your budget, you’ll also likely come across some signs of unnecessary spending. Maybe you’re making too many trips to Target throughout the month or stopping off at Starbucks more often than you’d like.
Make an effort to get rid of these unnecessary expenses until you’re out of debt. Or, make a specific category for them in your budget and set a strict limit for yourself.
Ditch Your Credit Cards
Do your best not to rack up additional credit card debt while you’re working on becoming debt-free.
If you find yourself tempted to reach for your credit cards when you’re out and about, simplify things for yourself and take them out of your wallet altogether.
Limit yourself to using your debit card only, or consider enacting a cash-only policy until you’re out of debt.
Work with a Debt Consolidation Service
You may also want to look into a debt consolidation service. These services can help you combine your debts and negotiate with lenders so you can get a lower interest rate.
Debt consolidation services usually charge a fee for their help, but it can be worth it if it lowers your interest rates and gives you a plan for how you’re going to pay off all your debt.
Tips for Staying Debt-Free
Once you’ve paid off your debt, you’ll feel as though a huge weight has been lifted off your shoulders. Remember, though, that you’ll have to change your spending habits if you want to keep that weight off.
Here are some additional tips you ought to keep in mind if you want to stay debt-free long-term:
Pay Off Your Credit Card Balance
Contrary to popular belief, it’s not a good idea to carry a balance on your credit card from month to month. This throws off your credit utilization ratio and can cause you to accumulate a lot of extra debt in the form of interest.
Instead, focus on paying off your credit card balance in full each month. If you find that you don’t have enough money to do this, you need to reevaluate how much you’re charging on your credit cards.
Continue Sticking to Your Budget
You may be out of debt, but that doesn’t mean it’s time to throw the budget out the window.
Review your budget and make adjustments so that it aligns with your current income and spending needs. Then, continue sticking to it.
This will help you stay on track and avoiding spending more than is wise throughout the month.
Pay Yourself First
When you get paid, start by paying yourself.
No, this doesn’t mean treating yourself to a new electronic device or going out to a fancy dinner. This means putting money in your savings account.
By paying yourself first, you’ll start to build up an emergency fund so that you don’t have to go in debt again in the future.
Avoid Unnecessary Fees
Avoid getting hit with unnecessary fees, too.
Set up automatic payments for your bills so that they come out of your bank account every month without you having to worry about it.
This will protect you from those pesky late fees, and you’ll get to enjoy peace of mind knowing your bills are paid without you having to lift a finger.
Stop Being in Debt Today
There’s no doubt about it. Being in debt is stressful, and it’s easy to feel that you’re going to be in debt for the rest of your life. That doesn’t have to be the case, though.
As you can see, there are lots of strategies you can try to get out of debt and remain debt-free. Give them a try today and you’ll be well on your way to financial freedom.
If you’re looking for more money management tips, don’t forget to check out the Lifestyle section of our website. You’ll find lots of helpful advice here to help you take control of your finances once and for all.