Tumbling into the world of debt can be so easy, but it’s the getting out part that’s tricky, which is why we have come up with 9 easy to help you clear your debt. Have you ever taken a good look at your finances, and ended up regretting it because you know how far in debt you are and have no idea how to clear it?
We’ve all been there.
Whether you’re in debt by £10,000, or just owe £100 to a friend or family member, nobody wants to go through each day knowing that they owe money to someone. Even hearing the word ‘debt’ can be skin crawling and can more likely be the reason for you to ignore it.
However, ignoring your debt is only going to make your situation worse. The longer you take to handle the problem, the more you’re going to wish that you tackled that debt sooner rather than later. Although you’re going to have to make some decisions that you’re not particularly going to like, think of the end result. You’ll be debt free! Getting out of debt is the unbearable part, and depending on your situation, you will have to take some drastic measures to get out of the red zone.
But never forget, it’s only temporary!
With that said, lets have a look at the steps that you can take that will send you on your way to become debt free!
BUDGET FOR YOUR LIFE!
That heading may be a little exaggerative, but creating a budget is the key ingredient if you want to clear your debt. Think about it: if you don’t know what your bringing in and where your money is going, how are you supposed to put money aside to clear your debt? Majority of people believe that budgets add more hassle and stress onto your already full plate, but this is so far from the truth. Budgets help you to spend your money responsibility without draining your bank balance.
If you need help getting started with your budget, try reading ‘Dealing with a Drop in your Income’.
WATCH YOUR SPENDING
When you’re in the middle of paying back your debt, watching how you spend your money is a very important factor. We would advise that you keep an eye on your spending for a month at minimum. This will give you a good indication as to how much you’re spending and what you’re spending it on. There’s no doubt that you’ll see money being spent on something that you didn’t particularly need. You’ll be shocked at how much you could’ve saved if you hadn’t let temptation rule you over.
STOP OVERSPENDING
If you’re a big money spender, then this is definitely a step you should consider taking. Cutting down on your spending is important if you want to clear that debt for good, but that’s easier said than done. If you splash out money on things that you don’t need – or in most people’s cases, can’t afford – then stop!
Clearing your debt means that you have to make a few sacrifices to reach that goal. If you keep making random purchases on a daily or weekly basis, you’re just making things worse for yourself. To cut down on your spending and save money, you can:
- Stop eating out and ordering in.
- Avoid Starbucks and Costa – make your coffee at home.
- Bring your lunch to work with you.
- Cut down on luxury spending.
- Shop with a list – to stop you from making impulse purchases.
- Bin the booze and ciggies – this will not only improve your spending, but your health too!
- Cancel the gym membership.
Cutting down on your spending habits can be tough, but it won’t kill you to try. Even just doing one of those things from the list above will help you to save money.
EARN SOME EXTRA CASH
If your current income isn’t enough to pay your bills and expenses, plus pay off your debt, then you might need to consider getting a side hustle. There are many jobs that you can take on to earn some extra income, especially if you want to work from home. You could:
- Become a Blogger: this is a really popular way to earn some money. The number of people who make a fulltime career out of blogging is out of this world! If you love to write and enjoy being creative, then this is the job for you. Plus, you have the option to work from the comfort of your home!
- Sell on eBay or Amazon: this is another good way to earn some quick cash. If you have items in your home that you no longer want and are still in good condition, you could sell it online. You can gain a decent amount of money, but remember that you will need to spend some money to get the delivery to the buyer.
- Fill out Surveys: this is a well-known way to earn some money. Depending on what website you use, you can expect to earn up to £50.
- Babysitting: whether it’s looking after your friend’s baby or starting your own nursery at home, you will be guaranteed to earn some good money.
If you’re looking for more ways to raise money, read ‘11 ways to earn some extra cash!’
CONSIDER DOWNSIZING
This may seem a bit extreme, but have you ever thought that maybe the house your living in might be a bit too much for your budget? Preferably, your payments towards your home should be at least one third of your income. If you’re paying more than half towards your home payments, then perhaps downsizing your home might be the ideal option for you. This will allow you to find a home that is more affordable and will save you a great deal of money.
You might want to consider downsizing your car too – if you have one that is. If you have a car that you are struggling to pay for, then you may want to look for a car that you can afford. There are many used cars out there that look and work as if they are spanking new at a more affordable rate!
AVOID TEMPTATION
Haven’t we all surrendered to temptation at least once in our lives?
Try to remove yourself from situations like that. If you love spending your weekends shopping in town, then stay away from town. If your group of friends constantly go on expensive trips that they want you to partake in, learn how to say no or look for more like-minded friends.
HAVE AN EMERGENCY FUND
Having an emergency fund is handy when life throws financial surprises your way. Whether it’s unexpected home repairs, car troubles or losing your job, your emergency fund will help you pay for these costs. Having an emergency fund helps to keep your stress levels at a minimum. It helps you to be prepared for any financial hiccup that may occur, and will help you tackle those nasty surprises without you tumbling into debt.
TREAT YOURSELF
You’re probably wondering: “I thought the whole point of getting out of debt was to stop luxury spending?”
This last step must seem a little confusing, when in fact it’s really simple. When the time comes that you have cleared your debt – no matter how long it takes – we recommend that you treat yourself for your victory. Paying off your debt can be tough depending on how much you owe, but once you have paid it all off, you should celebrate. Now, we’re not saying to go completely crazy. You want stay out of debt, not dive back into it. When it comes to your celebration, plan it. Don’t go bonkers!
SEEK PROFESSIONAL HELP
If you are struggling to pay back your debts on your own, you might want to consider speaking to an advisor that will help you take the best course of action. Here at Basik Money, we offer a wide range of solutions that can help you to clear your debt. You may wish to consider the following:
DEBT CONSOLIDATION
- This method merges all of your debts into one single payment.
- It usually involves taking out a secured loan or remortgaging your property to reduce monthly repayments.
- For some it can result in extra costs, which is why we recommend that you speak to one of our qualified advisors before making a final decision.
TRUST DEED
- A Trust Deed is only available in Scotland.
- It’s an agreement that you make with your lender to pay back your unsecured debts, such as personal loans or credit cards.
- You agree to make monthly repayments over a set period of time.
- Once that period is up, any remaining debts will be written off.
- Your lenders will no longer try to contact you asking for the money that you owe.
- Your debt becomes more manageable as you can pay them in affordable monthly sums.
INDIVIDUAL VOLUNTARY AGREEMENT (IVA)
- An IVA is an agreement that is made with all your creditors – like a Trust Deed – to pay off your debts within a set period of time.
- It’s only available to those who live in England, Wales and Northern Ireland.
- Any outstanding debts – after the set period – will be written off.
DEBT MANAGEMENT PLAN
- A Debt Management Plan is an agreement you make with your lenders to clear your debts without having to go bankrupt.
- It’s not legally binding, which means you don’t have a set time to pay back the debt.
- The charge you pay on interest will be frozen, meaning that you can focus on repaying your debt without worrying about extra costs.
- You can cancel it at any time.
WHAT YOU CAN DO!
If you feel that you are struggling to clear your debt, then call us today on 0330 041 2299 to get free impartial advice from one of our advisors.
