Debt Free Wannabe? Here’s How You Can Reduce What You Owe

By | January 10, 2017

At the turn of a new year, most of us pledge to sort out our finances, get out of debt and generally make better decisions when it comes to money. So there’s no better time than the present to put plans into action, and make 2017 as happy and prosperous as possible. Here are a few ideas to get you started.

Work Out Your Income and Expenditures

When you know exactly what you have coming in and what you have going out each month, it gives you total control over your finances. It’s a good idea to find out what has to be paid and when- carefully noting down the payment date and amount of each household bill in a notebook or on a calendar. This way you’re never missing payments, falling behind or getting yourself into trouble with money. This will also give you an idea of where your money goes each month, and highlight areas where you’re able to make cutbacks. Any money freed up can be used to pay off debt; this will get the balances down quicker, and also save you on additional interest

Set a Budget

Another way to be in control of your money is to set a realistic budget. Along with bills, your budget will include things like food and travel (such as bus and train tickets if you use these to get around). Toiletries, cleaning products, pet care. Working out exactly how much you have in each area prevents you from overspending, and again helps you to see where your money gets spent each month.

Consider Consolidation

If you have lots of different accounts open, consolidating them into one payment can be much easier to manage, and work out cheaper too. This is where you take out a loan or use a credit card to pay off everything you owe, and close all of the other accounts. Rather than paying interest on lots of separate accounts, you pay just one- on the card or loan used to consolidate. Often you can find good deals where you don’t start paying any interest for a number of months too, giving you time to pay down the balance even more quickly. If you’re looking to get a handle on your finances, debt consolidation could be a good option.

Get Debt Advice

People put off getting debt advice because they can feel ashamed, guilty or because they’re not ready to face up to the issue. But remember, debt is something that can happen to anyone. No one is perfect; sometimes situations can and do lead to these kinds of things. The important thing is to try and put it right as soon as possible. Buying your head in the sand, unfortunately, won’t make things go away. The quicker you take action, the more fees you’ll avoid and the weight of worrying about it can be lifted off your shoulders. There are lots of free debt helplines and charities out there where you can seek advice. Whether your next step is a debt management plan, an IVA, bankruptcy or negotiating with creditors, you’ll feel much more on top of the situation with a plan in place.

What are your financial goals this year? Do you have any tips for reducing debt more quickly?