Debt is expensive and can be a serious obstacle if you want to achieve important financial goals. Unfortunately, when you owe money, it can be challenging to get out of the hole of debt.
The good news is that there are proven steps you can take to getting out – and staying out of debt as soon as possible.
If you are not sure where to start, you should consider the following five points if you hope to pay off debts and stop borrowing in the future.
1. Earn more Money
If you are very determined to pay off this debt within a year, you should look for ways to increase your income and use this extra money to pay off the debt as soon as possible.
Consider whether you can work part-time or negotiate a raise with your manager to earn more money for at least a few months and make debt reduction the highest priority.
2. Think About Debt Consolidation
Debt consolidation is an important process in staying debt-free. The goal is to combine the high-interest debt into one or more consolidation loans with much lower interest costs and lower payments.
3. Identify your Money Triggers
If you spend impulsively, it might be difficult to get out and stay out of debt. Most people have things they cannot resist buying. It can be the latest fashion, latest gadget, art, vacation, food, and even drinks.
A crucial step in managing your debt is to identify what your spending triggers are and how to avoid them. By identifying your weaknesses, you can avoid giving in to impulse buying and essentially eliminating temptations.
4. Set up an Emergency Savings Fund
If you have never had an emergency savings fund, start by setting a small, reasonable goal. For example, you can set a target of saving up to £500 for a certain number of weeks or months. This would cover most of the unexpected daily expenses that always arise. Even with a limited income and a balanced budget, you should be able to save as much in a few months. When you reach this goal, you can then strive for £1,000 and more. This