The average household in the UK has an astounding £2,594 credit card debt, and many individuals have even more debt spread across various other lenders.
This debt can hold you back in everything from buying your dream car to getting on the property ladder, so it’s important that you try to reduce it.
Once you’ve achieved the credit score and debt ratio you’ve always wanted, it’s also vital that you get into healthy financial habits. If you avoid future debt, then you’ll be able to save money and grow your opportunities.
If you want to learn some tried and tested tips to help get you out of debt and into good habits, then read on.
Consolidate Your Debts
The first step towards reducing your debts is to consolidate every financial obligation you have into one, using a personal loan or balance transfer card. Credit card consolidation will save you money and allow you to focus on paying off only one debt, rather than several. It’s important that you find the perfect option to suit your circumstances so that you can get on the road towards financial recovery and independence. The key is to review your circumstances and consider how long you want to be paying off the debt, according to thesun.co.uk.
Focus Your Attention On Paying Off What You Owe
The faster you pay off your debt, the less money you will pay on it, so you need to focus on paying it off. This might mean that you have to forgo a holiday for a year or cut down on your other expenses, but these sacrifices will be worth the effort in the long run. You should also consider taking on extra, part-time work to supplement your income and earn extra money to invest in paying off your debt. Once you’ve paid off everything you owe and started working towards a healthier approach to money, you’ll be able to enjoy spending it again.
Explore The Reasons Behind Your Debts
Getting rid of debts isn’t enough; to stop yourself getting back into debt, you need to consider how you got yourself into this position in the first place. The problem might be obvious, like a gambling habit or a mental breakdown. In some cases, however, it might be that you simply weren’t financially savvy enough to handle access to so many credit options, or that you got carried away with your spending. Review the reason, or reasons, behind your debt so that you can understand what went wrong and learn from your past experiences.
Create A Personal Budget
Budgets aren’t just for companies; they’re also valuable tools for individuals, so it’s important that you create one that shows your ingoing and outgoings. Having all this information laid out in front of you can help you to visualise your spending and see what can be changed. Budgeting apps will layout your budget clearly and make it easy to see where your hard-earned money is being spent. Set aside a certain amount of money every month to be saved, so that you can enjoy it later and buy the things you really need. Make sure that your budget includes room for treats so that you can enjoy your money as well as putting it to good use.
Find Out How To Save Money On The Things You Love
As mentioned above, it’s important that you treat yourself every now and again, but you can save money on these treats just as much as you can essentials. Learn about using coupons to save yourself money on experiences such as dining out and trips to the cinema. You can also save money on expensive items, such as designer clothing and luxury products, by using the internet to compare prices from various retailers
Reconsider Your Major Expenses
Make a list of all the biggest bills you pay and explore the ways that you can reduce them. Some may be unavoidable, but you may be able to reduce some other expenses and save money in the long-term. In some cases, the reason behind your debt might have been that you were spending money on lifestyle choices that were simply unnecessary. For example, if you live in a city with great public transport and walking routes, but own a car, then this is a needless expense. Consider whether or not you need every major expense that you currently pay for, and if there are ways to reduce these costs.
Learn To Use Credit Cards Responsibly
Credit cards may have been part of the reason why you got into debt in the first place, but when used correctly, they’re a great way to keep your credit score healthy. Research shows that more than half of UK adults don’t understand that paying off a credit card balance promptly can improve your credit score, which can impact on the way they handle their finances. Learn about how to use credit cards to manage your money and keep your credit score healthy throughout the rest of your life.