Debt is a burden which many of us, unfortunately, carry around on our shoulders. It can be the cause of a lot of unhappiness, stress, and anxiety, and becoming debt-free can seem like an impossible task. Many people’s debt levels spiraled out of control during 2020 as CoronaVirus caused huge unemployment, business closures, and economic turmoil. With vaccines providing a light at the end of the Covid-19 tunnel, we can all go into the new year with renewed optimism. Becoming debt-free in 2021 is a new year’s resolution for so many of us, and it would be a huge achievement this year.
To help you with your debt relief journey, here are 6 tips to release yourself from debt.
1. Budget Effectively
There are many people who end up in debt because they don’t budget their finances effectively. While it can be very difficult at times to make ends meet, there are many people who earn enough money to easily cover their monthly expenses but don’t effectively plan their finances. A well-written household budget will help to reduce wastage and will also make it clearer exactly where your money goes. Make a list of all your outgoings against your income and this will help you to see if you are earning for your current lifestyle or if there are any spending areas where you need to cut back.
2. Pay Off Debts Before Making Purchases
Rising debt is a slippery slope because many people end up making purchases on top of what they already owe. This just makes a bigger and bigger problem which can seem inescapable. It is important to pay off your existing debts before making any new purchases in order to get your finances under control. There are various options for writing off your debts such as IVA’s, trust deeds, and other government debt relief schemes. Some of these schemes can save you a lot of money with some people having as much as 80% of their debt wiped. Always speak to an expert before you sign up for any debt relief scheme to ensure it’s the right one for you.
3. Reduce Credit Card Reliance
Over-reliance on credit cards is a major factor in many people’s debt problems. The ability which credit cards give us to buy things for which we don’t have the money often results in people struggling to even pay off their interest. In order to prevent credit card debt, it is very important that you reassess how you use your credit cards. Never buy anything which you know you won’t be able to pay for. A credit card is not a blank cheque and should only be used within your means.
4. Put Aside Savings Each Month
Another reason why people often end up in debt is that they are forced to pay for something in an emergency which they don’t have the money for. This may be a broken washing machine or a burst pipe but it can end up throwing your budget completely out of whack. Always put a little money aside at the start of each month for emergencies. If this money doesn’t get used at the end of the year, you can use it to treat your family.
5. Make Small Consistent Changes
There are so many savings to be made when you break your spending down. One really simple change that many people make is to take their own lunch to work rather than eating out every day. It is really remarkable how much money you find yourself with at the end of the week just by making this small lifestyle change and this money can be used to pay off some of your debts. Look at your daily spending habits and see if there are any areas where you can save money. Be strict with yourself and consistent in your changes and the savings will really start to add up.
6. Sell Things You Don’t Use
Many of our homes are full of things that we don’t use or no longer need. One easy way to make some money that can be used to pay off debt is to sell these things to someone else who can put them to use. There are various online sites such as eBay and Craigslist where you can sell your unwanted items and which will help you to earn some useful cash.
Massive debt is a terrible thing that can really affect people’s happiness. After the tough times of 2020, it would be fantastic if we could all use the new year to clear our debt and get financially stable. With some small but systematic changes in your life, it is possible to clear even a big debt in a relatively short amount of time. Follow these 6 easy tips and you will see a huge improvement in your financial situation.