According to recent statistics by Aviva, the average household debt in the UK is more than £10,000. This includes loans, credit cards, hire purchases and overdrafts. Families find themselves struggling to pay off these debts, as their cost of living continues to be high and interest rates add up more and more.
Getting yourself trapped in a cycle of debt can be very easy to do. One day you are absolutely fine; maybe living pay cheque to pay cheque or perhaps with a small amount of savings. Then something unexpected happens. Perhaps your car breaks down and you need to pay for repairs, or you lose your job for a while and are unemployed for a few weeks or months while you find another one. Whatever happens, you find yourself needing to borrow a little bit of money to keep yourself afloat and perhaps start charging a few items to your credit card.
Sinking in Quicksand: Fast!
Once the cycle begins, you will find yourself falling deeper and deeper into the trap. If you cannot pay your loans and credit card bills back fast enough, you will have to pay interest which will reduce your income even further. Eventually you will find that a large chunk of your wage has disappeared to interest payments before you can even get started on paying for your weekly expenses and paying back the principal of the loan.
Once you have gotten into the cycle of debt, it can be much more difficult to climb back out of it. The best thing to do is to save up an emergency fund which can cover you in an emergency so that you can avoid going into debt in the first place. However, if this is not possible then you will need to find a way to get yourself out of debt. It will be difficult for a while, but once you get yourself back out of the red then you will be able to take charge of your finances for good.
Here are some tips to keep in mind that will help you on your path to get out of debt:
- The first step is to get organised and to outline all of the debts that you have. How can you make a plan for paying everything back if you don’t know how much you owe? It might be scary to face the numbers, but the problem needs solving. Total up all of your loans, credit card bills and other debts so that you have a clear picture of what you are up against.
- Take this information and put it into a spreadsheet which you can update as you pay off each of the debts. It will help you to stay motivated if you can see your progress as you go along.
- While you are paying off your debts, stop accumulating more! If you can’t resist the urge to splurge, put your credit card in a bowl of water in the freezer. Every time you need to use it to make a purchase, you will need to take it out and let it thaw. Forcing yourself to wait will make you think about whether you really need that purchase after all.
- Cut out all unnecessary expenses. Take a look at your monthly expenditures and see how much of a basic frugal lifestyle you can lead for a while. Stop eating out and cook your own cheap meals at home instead. Spend nights in rather than going out to the movies or on a night out. Don’t buy any electronics, new clothes or other luxury purchases for a while.
- With all of the money that you save from cutting down your expenses, put it straight towards paying down your debt.
- Another way to manage paying off your debt is to make some extra money that you can put towards reducing your principal. You could take on some overtime hours at work to make a bit of extra cash, or start another evenings and weekends job on the side. You might have to work a bit harder than you would ideally like, but this extra work can be a temporary situation to help you get out of debt and once you have achieved your goal you can go back to your regular work schedule.
- Once you have paid off your debt, stay frugal for a little bit longer so that you can save up an emergency fund to cover yourself the next time you get into trouble.
Follow these tips and make paying off your debt a priority and soon you will be out of the debt cycle and onto a better financial situation. Afterwards, continue to spend less than you earn and you should never need to get trapped in debt again.
Bob Emerald is a freelance writer who paid off her debt of nearly £10,000 in 14 months with smart budgeting and financial planning. He writes for MyDebt.co.uk, a service that helps over 1,000 people every month with their debt management.
Best Places To Visit In The North Of England
If you live in England, you will know there are many different places to visit for the weekend. There are...
Green Home Improvement Ideas
In a world where environmental concerns are growing, the concept of “green” has gone beyond a trendy catchphrase and is...
How to Host an Unforgettable House-Warming!
The time has finally come. You have moved into your dream pad, and are officially adulting in your very own...
A Guide to Parking Lot Striping
The journey to a well-striped parking lot begins with the right paint. In this brief guide, we’ll unravel the mystery...
Business Tips For Protecting Your Finances During A Recession
In 2023, taking the necessary steps to protect your finances for your business is now more important than ever. The...
Tips For Cleaning Your Trainers
If you’re into your trainers and streetwear, you’re likely to be very conscious of keeping them looking their best! So,...
Branding Trends For Start-Ups in 2023
Branding is incredibly important as it impacts how your business reaches and connects with its target market. If you’re branding...
Avoiding the Wrong Kind of Growth
Growth is vital for any business – some models, like tech start-ups, are built around periods of dramatic, explosive growth...
How To Become A Property Developer
There are several reasons why an individual will want to become a property developer. One of the main reasons for...
What Is The Difference Between Cyber Attacks and Cyber Threats?
If you own a business that uses the cloud to manage workloads, you have probably heard of the terms cyberattack...
3 Types of Marketing Every Small Construction Business Should Do
Construction is a very saturated sector, whether you’re a large or small construction company, so marketing should be at the...
How Relevant Life Insurance Plans Can Future-Proof Your Business
Last year, UK inflation reached the highest level that it had been for decades. The markets became unsteady and nervous...
In a Car Accident? Here’s How to Find a Great Lawyer
If you’ve recently been in a car accident, you know that it can be an overwhelming experience. Not only do...
Considering Therapy? Here’s a Few Common Therapy Techniques Explained
If you’re considering therapy as a means to improve your mental health, you may be curious about the type of...
Top 5 Home Repairs You Should Never DIY
DIY home repairs are all the rage these days. But before you jump on the bandwagon, there are some things...
Tech9 years ago
Creating An e-Commerce Website
Tech9 years ago
Design Template Guidelines For Mobile Apps
Business4 years ago
What Is AdsSupply? A Comprehensive Review
Business8 years ago
The Key Types Of Brochure Printing Services
Law3 years ago
How Can A Divorce Lawyer Help You Get Through Divorce?
Tech6 years ago
When To Send Your Bulk Messages?
Tech3 years ago
5 Link Building Strategies You Can Apply For Local SEO
Travel11 years ago
Who Else Wants Also Nfl Hat