Being free of debt is one of the highest priorities many people endeavour to achieve. No more chasing calls from creditors, no more sleepless nights, and no more black marks against your credit. If your wallet or purse is breaking at the seams with credit cards, maybe it’s time to get the scissors out and reduce your debt, sharpish.
0:01 - Get It in Your head!
Firstly, you need to have a debt-free mind-set in order to keep your bank balance in the green. It can be tough paying off multiple accounts when you’re short of money, but it is integral that you keep up to date with payments so you don’t fall further into the debt trap. You need to realise that if you can’t afford a purchase there and then, you will have to go without. Excessive spending is one of the main causes of debt, so if you manage to get that under control, you’re half way there!
0:15 - Bad Debt and Good Debt
Some debts are obviously worse than others, so distinguish the ones that are causing you to lose most of your pay packet, and prioritise them. Manageable debt has an interest rate under 10 per cent. Mortgages and student loans are examples of these, especially if you’ve got a fixed rate loan. Bad debt however is everything else, including credit cards, store cards and high interest loans.
0:22 - Pick a card!
Separate all your credit cards into high and low interest piles. Hide the ones with the high interest, or better yet, cut them up – you’ll be less inclined to use them if they’re in pieces! Then, pick one or two cards out of the low interest pile and ONLY use them for emergencies. This way, if you do ever have to use your credit cards, you’re using the ones that won’t cost you those valuable pounds in high interest.
0:35 - Attack your bills
Gather together all your bills and repayments, and calculate the minimum monthly payments plus the interest you’re getting charged. Once you have that figure, make sure you separate it from your pay-check as soon as it comes into your bank, and use it to pay off those bills! It’s best to add a little extra so you’re showing the lenders your commitment to paying back the debt, and after a few months, your accounts will be looking a lot healthier!
0:45 - Refinance
Look at the bills that you’re paying the highest interests on, and see if you can get a lower interest rate. It may sound too good to be true, but many lenders want to actively avoid getting people into unnecessary debt, so if they can, they’ll help you out by refinancing your accounts.
0:58 - Get Tough
Be tough on yourself when paying your debt off. If you can spare a little cash, even if it’s a few pounds towards paying off that sum, then you’ll be better off in the long run. Remember, its your debt, and you’re the only one who can sort it out!
0.60! - Sit back, relax and enjoy a cappuccino!
This guest article was written by Francesca, who hopes to share her knowledge of debt management and personal finance through her writing. If you are concerned about mounting debts, she suggests looking into debt solutions such as an IVA from IVA expert – you can visit their website to find out more.