Sensible isn’t always a word that people can apply to their money habits, we can all get a compulsion to go off the rails on a whim, and it’s something that we bitterly regret further down the line. For a lot of people, motivation is the key thing, for example, if people want to get out of debt so they can buy a house. But for the majority of us, motivation isn’t something we have for the most part because we've already made our big purchases, so what's the option? Planning! It’s as simple as that.
While we don’t really like the idea of planning where our money goes, it’s really the best way to escape a bad debt cycle. The first thing to examine is your list of debt. Make a list from the most important to least important and start to pay off the most pressing ones. Speak to every organization and figure out what the least amount is to pay off each month. Once that is sorted, you need to look at your spending habits, and principally the interest on each credit card. The trick is always to find the best interest rates, and if you haven’t done so, transfer your debt to 0% credit cards. This doesn’t give you permission to spend on those cards, but you are now saving yourself a sizable chunk of money every year, so it’s much easier to pay off, reducing your overall outgoings. This doesn’t give you much breathing space, but you can now start to look at your financial situation and make some proactive planning to get out of debt.
The next step is to look at your everyday outgoings, and is there any way around cutting them down? Itemized bills like your phone, gas, or electricity are things to examine and see if you can get cheaper rates. While investing your savings might not be a viable option right now, you can make the most of savings accounts that you can put a very small amount of money into. Even though you may have a very small amount of money to play with, the best bet would be to use the money saved on your everyday outgoings and place that into a savings account with a high interest rate. That way, you are getting some additional money for your effort, which can help with paying off any other outstanding debt. Take a look at the latest bank savings account promotions, and with each type of savings account, there could be something to pique your interest. With some accounts, you can accrue a good amount of interest with just a small amount of money sitting in that account.
The final point of getting out of a bad debt cycle is to not let it impact your everyday life. It can be easier said than done, but you need to find suitable ways of keeping sane under the pressure. Home movie nights, gatherings at friends’ houses, or just a day trip out somewhere with a packed lunch are simple options that don’t have to cost the earth!