Statistics show that around 63% of UK adults are in debt. Whether it’s an outstanding personal loan or credit card balance, debt can easily consume your life if you don’t take steps to stay on top of it. Therefore, we want to introduce some of our top tips that will help you regain control of your finances and ensure you don’t succumb to your debts.
If you truly want to wrestle back control of your finances, you need to start by budgeting. This doesn’t need to be anything over the top or intricate, but you need to get into the habit of tracking your income and expenditure. You can begin with a simple spreadsheet that breaks down all the income and outgoings in your life. While it might seem daunting at first, the key to budgeting is getting started, and you can go from there. Your income is simple enough, but make sure you include the following items in your expenditure column:
- Rent or mortgage payments
- Council tax
- Utility bills
- Transportation costs
- Internet and phone
- Debt servicing
On top of these core costs, consider adding the following non-essential items:
- Gym or social club memberships
- Eating out
- Monthly savings contributions
- Holidays and trips away
- Other leisure activities
Dividing your monthly expenses into essential and non-essential items is an important first step, as it enables you to see exactly how much you spend on certain items each month. It also helps you to work out how to reduce your spending in specific areas, which might mean you need to cut back on some of those non-essential luxuries.
Stop borrowing money
After creating your budget, it’s time to stop borrowing money. Be it loan applications or credit card expenditure, spending money that you don’t have is not going to help you pay off your debts. In fact, it’s just going to make things more difficult for you. So, if you’re motivated to get out of debt, stop borrowing money for a set period of time. You can always come back to it later when you’re in a much better financial position.
Make more than the minimum payment on your credit card
Credit card companies offer you the chance to pay the minimum amount each month on your credit card. But doing so doesn’t actually eat away at your debt. Rather, it just allows you to keep your head above the water. Even if you’re only paying £50 more than your minimum, doing so is super important if you want to work your way out of debt. So, take steps to increase your direct debit payment to your credit card company, and you will see your debt levels reduce month on month.
Start a side hustle
Another great way of reducing your debts is to earn more money. Therefore, starting a side hustle can be a really effective way of bolstering your monthly earnings. On average, people with a side hustle add as much as £6,300 to their earnings each year, which equates to £525 per month. You can use this money to pay off some of your debts. It’s remarkably simple to get started with a side hustle, and there’s so much you can do, from blogging to launching an eBay store.
Think about debt consolidation
If you’re really struggling with your credit card debt, in particular, you should think about consolidating your debts. To consolidate your debts, you can take out a personal loan from a lender like Koyo Loans. Once your application is approved and the money is in your account, you can then pay off your outstanding credit card debt. Then, going forward, you only have to worry about making one regular payment on time. Done correctly, debt consolidation can save you hassle – and money – every month and may help you get out of debt more quickly.