My Top Tips For Clearing Debt

My Top Tips For Clearing Debt

 

Money. It’s the bane of most people’s lives, isn’t it? There’s never enough of it, there’s seemingly no correlation between our wages and the cost of living, and if we want to have fun or spoil the people we love, there’s always a cost involved. With so many of us living pay cheque to pay cheque it’s easy to see how so many end up borrowing money and running up debt – I did when I was in 20’s and I wrote about my battle to beat my financial demons extensively on this here blog.

 

 

Having been in debt previously – £30,000 at my worst point – I am now acutely aware of the incomings and outgoings of my bank account each month and work hard to manage my finances as best I can, but I know all too well how easy it is to find yourself deep in a hole of owing money and unable to claw your way out.

 

A few days ago I was reading an article that surveyed a cross-section of society about their financial situation and the results, although sad to see as the standard condition we find ourselves in these days, wasn’t too much of a surprise to me.

 

43% of people said they had to borrow money over the Christmas period in order to be able to afford those things that are expected of that time of year – gifts, food, celebrating with family and friends etc.

1 in 3 people said they would borrow money to avoid FOMO (Fear Of Missing Out).

42% had hidden debt from their partners, friends or family, and 35% were worried that their loved ones would find out about the money they owe.

Only 41% of people would be willing to seek professional help with their finances.

(More info on this survey can be found here)

 

The part of this article about the fear of your loved ones discovering your debt really rang true to me. I hid the extent of my financial troubles for years, only admitting it when I got to the point that I couldn’t afford my utility bills or food (I was living on a diet of water and a few dry handfuls of cereal over the course of the day). However, when I did finally tell my family and friends the situation I had got myself in to, they were nothing but supportive, understanding and full of love. I had felt they would judge me or tell me I was stupid, but not one person did – everyone wanted to stand by me and help me through it. I cried a lot during those early days of revealing the truth; to see people’s reaction was the most incredible thing for me, having felt alone for so long.

 

Thankfully I was able to get myself out of debt within a few years – it wasn’t easy but I committed myself to it 100%. As well as giving up the flat I was so happy in, I made small changes to my every day that meant I could claw back a few pounds here and there and, eventually, all those pounds added up and I was able to get myself back on the straight and narrow.

 

Before I share some of the processes I put into place I have to say I am not a professional and these little tips are just a few every day changes I made to my life, but if you’re struggling financially, please make an appointment with a professional to get some advice and assistance as they will be much better placed to help you than I am.

 

Make A Spreadsheet
This was perhaps the most important part of the process for me and is something I still use religiously to this day! Add your income and various expenditures onto the document, broken down into different sections for the expenses you have – for example, some of mine are: food, home insurance, utilities, rent, pet insurance, train fare, etc. I check my bank account on an almost daily basis, updating my spreadsheet to show what my outgoings have been. This allows me to see a projection for the rest of the month, what bills are yet to be paid, and if I’ve overspent in any areas.
Alongside this, create a second spreadsheet for your debt(s) showing their name, what is owed, and what you are paying off each month. If they have a 0% interest rate, highlight the date on which this finishes and estimate what you need to be paying off of it each month in order to meet this date. If you’re not going to be able to pay the balance by the end of your 0% date, don’t panic, this leads us nicely onto my next tip…

 

Move Your Debts On To Cards With 0% Interest Rates
When battling debts it’s quite often the interest rates that give us an absolute hammering and mean we can’t seem to keep our heads above the metaphorical water, however, there are lots of 0% credit cards out there which offer the opportunity to start hacking away at the total balance of what you owe.
If you are paying interest on your debt, see if you can transfer all or some of the balance on to a 0% credit card. Bear in mind, any time you apply for credit it affects your score, so instead run a soft search using the Money Saving Expert Eligibility Calculator which will carry out a preliminary search for you without it affecting your status.
If you’re unable to transfer all your debts on to a 0% card and still have some of them earning interest, focus on paying those off first. Settle the minimum payment on your 0% debts each month and pay as much as is feasibly and sensibly possible off of those nasty interest-incrueing debts instead. Once they’re cleared you can focus your attention on the interest-free debts.

 

Make Paying For Things Harder
Reaching for your card or using Paypal is easy – we barely have to think about it and with a simple punching in of numbers, contactless touch or entering of a password, we’ve spent our money. I moved my bank card to a different place in my purse and changed my Paypal password so that when I went to pay for anything my brain wouldn’t switch go into automatic mode and instead had a little jog of “Oh, my card isn’t kept there anymore/Ooh what’s my password?” – something seemingly minor but utilises that little jog to think, “Do I really need to buy this?” Coming out of a thoughtless process and adding in that little nudge will act as a reminder to be more aware of your spending.

 

Is It Want Or Need?
Following on from the above “Do I really need this?” comes my next point – learning the difference between want and need. It sounds stupid but I often used to find myself thinking “Ah I need that new lipstick!” but with a simple change of thought process, I found that I spent a lot less money. I already had a lipstick, I didn’t need it, I wanted it and therefore it wasn’t necessary. Save those pennies and pay them off of your debt instead! I put myself on a spending ban for 2 years and didn’t buy anything that wasn’t absolutely essential to life and it made such a difference; I hadn’t realises how much money I’d been wasting beforehand!

 

Spend Less On Food
Honestly, buying food is where a huge amount of my money would go. Simple changes to my habits meant I could cut back big-time. I began shopping at lower cost supermarkets and, nowadays, I shop online instead as I can search for the best deals, compare items and ensure I get the absolute maximum for my money. Each online shop takes me around 2 hours to do but it’s worth it to get the best value for your money. Buying frozen vegetables rather than fresh is a good way of saving money too and they’re just as nutritious so you have nothing to lose!
If your fruit or veg is a little bit worse for wear don’t bin it, all is not lost – the fruit can be blended up into a healthy smoothie (or you can freeze into lollipops) and the veg can be made into a soup which, again, can be frozen for a later date. Also, it goes without saying, making your own lunch to take to work each day is a huge cost-cutter and, often, a lot healthier too!

 

Check Your Utilities
Are you getting the best rate possible for your utilities? Gas, electric, broadband, TV, mobile – all of these are competitive markets and you might be able to find better deals out there than the one you already have. Do some research and, if you find something cheaper, approach your existing provider and ask them if they can match it for you. If not, kick them to the kerb and switch your allegiance.

 

Staying In Is The New Going Out
As the survey I read highlighted, the Fear Of Missing Out means a lot of us will spend money we don’t have in order to have nights out with our friends or go on holidays that, really, we can’t actually afford. In London a glass of wine will set you back £7 or more, but pop into a local supermarket and you’ll find whole bottles of wine for the same cost! Get everyone to bring a bottle and something to eat and have a night in with friends, food, a film or crank that music up and have a dance around in the kitchen instead! At the end of the day, it’s all about the people we’re spending time with, not the venue we’re in, that makes nights out so special.

 

I’m no expert, as I said, but I have been heavily and frighteningly in debt and, after a lot of hard work and heartache, managed to get out of it. It isn’t easy – it takes sacrifice and time – but the peace of mind and sense of achievement at the end of the process makes it totally worth it.

 

If you’re having financial worries please don’t suffer through it alone. It is such an intensely worrying time and can take a toll on your health and mental wellbeing too. Seek help, talk to friends and family, and don’t give up hope, you will get there in the end!

 

 

 

 

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Featured image c/o Hamza Butt

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