Surviving Debt And Getting Back On Top
This is not a step-by-step guide on how to get rid of debt. This is a checklist of actions to help you start taking the right steps and maintaining better habits. This is the knowledge of what tools you can use when it comes to facing the prospect of debt whether you’re freshly facing it or months into the struggle. Everyone should be able to take advantage of at least half these tips and see that debt become a lot more manageable.
Create a debt-busting budget
The very first thing you have to do is make sure you’re not taking any more steps backward. When facing debt, it’s easy to freeze up and do nothing while you look for solutions. While you’re doing nothing, however, your debt is growing and pushing you into worse and worse positions. So, start by creating a budget that is going to guarantee that you set aside money every week, month, or however often you get paid. That money gets paid out towards your debts (especially high interest credit cards or student loans) before anything else comes out. You need to pay debts first so that life’s little expenditures don’t build up to the point where you no longer have that money you kept aside.
Quell those bad habits
We all have habits that trigger, sometimes without us consciously noticing. Many of those habits aren’t going to be good for your attempts to put more money towards paying back your debts. If you have credit cards you shouldn’t close them, as they can be helpful in making debt manageable by transferring it to a place with better interest, but you shouldn’t carry them around in your wallet or purse, either. It’s all too easy to think of it as easy money and spend it unnecessarily. There are plenty of other little habits that add up over time, as well. For instance, if you take a drink of coffee on the way to work, don’t buy it from a coffee shop. Make it at home and fill up the thermos.
Get an authorized overdraft
Naturally, sometimes you won’t be able to stop a surprising expenditure that can impact your finances. Sometimes, it will take you beneath your available money and into your overdraft. If you can do it before your debt gets too intense, ensure that you have an authorized overdraft. You need to be more careful of not spending to the point you dip into it too often, but if you go into the minus and you’re not allowed to, it can start adding heavy bills that will only make it all the harder to manage that debt.
Structure how you pay
Ensuring you put money aside to pay your debts as soon as you get paid is essential. But how you structure those payments is just as important. Not all debts are created equal and they shouldn’t be treated as such. You should, of course, ensure you pay every debt you can to a degree. It saves you money in the long-term by working to reduce the interest payments on them bit-by-bit. But the bulk of your debt payment should be working one down at a time. If there are debts you could close very quickly with a few payments then, by all means, get them off your back. For the long-term strategy, however, you should mainly pay toward those with the biggest interest amounts. Those are the ones that cost you the most in the long run if you keep letting them grow.
If you can, talk to your creditors
The sooner you can talk to a creditor, the better. Most creditors don’t want to have to get collectors involved. It costs them money and they would rather not have to go to the trouble. When you get to the stage that collectors are involved, then negotiating can be a lot more difficult. With many creditors, however, they would rather arrange payments that fit your ability so they can ensure they get what they’re owed. When you look to negotiate with creditors, make sure you know what you’re going to ask for. If it’s a lower interest rate or a longer payment period, for instance, that is what you should ask for.
Negotiate your bills
Naturally, you want to free up more money to pay off your debts quicker. As well as negotiating with creditors to get a bit more leeway to pay off your debts, you can also negotiate with your service providers to spend a lot less on your household bills. Take a look through your bank statements for the past few months and make note of all the individual bills and subscriptions you’re paying off. First, cut off those that you might have forgotten or you’re no longer getting your money’s worth from. Then get in touch with your providers and see what deals they offer to new customers or online-only for instance. Many of them will be willing to switch you over to their better deals. Don’t be afraid to scan the market and switch to deals that offer you even temporary savings. Every little helps as they say.
Cut what you can’t negotiate
Besides the subscriptions you can cancel outright and the services you can negotiate, living a bit more efficiently is going to be a big help in saving you money, as well. For instance, when it comes to energy bills there are plenty of ways to save. Buying LED, halogen or CFL bulbs instead of the regular ones. Ensuring you don’t leave a computer or TV in standby but turn it off when you’re not using it. Washing your own dishes more often than using the dishwasher. It’s estimated the average family can cut their annual energy bills by a third simply by taking energy efficiency a little more seriously. That’s potentially hundreds of pounds a year.
Make debt manageable
If you’re dealing with multiple debts and finding it hard to manage them all, then your credit could be your best friend. For one, consolidating them with a proper debt management deal cuts out a lot of the stress by reducing your creditors from many to one. You won’t be dealing with letters coming in through the door every day. The right consolidation can also help you move some of the higher interest debts into a much more manageable format. See what kind of management options your credit allows. The better your credit, the better a consolidation you can get.
Make more money in your spare time
If you have a lot of spare time, then there are plenty of ways to make it work for you. For instance, there are a lot of part-time work opportunities online. If you’re good at writing, then getting into content marketing firms can work for you. If you don’t mind plenty of admin, then you can work as a virtual assistant. You can get paid to fill surveys, to browse the web, and even play games. These sites aren’t going to help you get rich quick. But even when they don’t offer cash, they can offer vouchers that can seriously cut down your spending.
Finally, make sure that you take care of yourself and allow (or force) yourself to relax from time to time. Put on chill music, light an aromatherapy candle and just destress. Dealing with debt, even when you’re making progress, can take a toll on your emotional health. That can lead to some impulsive actions that only set you back. Try to keep yourself in a good place, mentally.