Anyone can easily find themselves in debt, whether from a bad financial decision or from loans for things like your home or your car. If you’re in debt, it can be very stressful, but there are some manageable ways to reduce your debt without having to make big life changes. Try these tips to get your debt down now.
Take a look at your finances so you can get a good overview. Make a note of any income coming in, including your salary, any benefits or any other sources like side gigs. Start tracking your spending, whether in a notebook or on your phone. If you can see where your money is going out, you can see any excessive spending, like an expensive coffee habit. Where else could you save? Are you paying for a gym membership you don’t use? Make a list of any debts you have and organize them into priority order to pay off, with the highest interest at the top.
Take a look at your debts. How much in total do you owe? Having one large number gives you a more solid goal than just seeing your debts in smaller individual numbers. This gives you better focus for saving. Set a timeline for paying off your debts to keep you focussed on the goal.
Get help. If you’re struggling to manage your debts, don’t try and battle on alone. If you’re finding it hard to meet payments, contact a debt professional to see if they can give you advice on how to better manage your debts. You may be able to get free credit advice, or you can hire a professional like McCarthy Law Debt Law Firm to help you negotiate your payment plan with your creditors.
Earn some extra cash and have a clear out at the same time. Go through things like clothes, old children’s toys and your CDs and DVDs. Sort things into things you want to keep, what to sell and things to donate. Things that can be sold can be listed on sites like eBay or Depop, or you could hold a garage sale. You can put the extra cash you make towards some extra debt payments.
Take a second job to give your income a list. If you have enough spare time, you could take on a second job, such as some bar work in the evening or working as a waiter at the weekends. If you don’t have time for a part-time job, you could do some casual work around your neighbourhood, such as walking dogs or pet sitting for people when they’re away. Take advantage of your skills, by earning some extra cash tutoring the neighbour’s kids in Math, baking cakes for special occasions or selling Wordpress templates on.
Create a budget. Budgeting more effectively can help you to save more money on day to day expenses, giving you more spare money to put towards paying down your debts. Be realistic, and you won’t have to give up everything you enjoy. Even small changes can help, such as switching to supermarket own brands, making lunch at home and giving up your morning takeaway coffee.
Give up your cable package, or consider dropping a streaming service if you use more than one. If you get store newsletters, unsubscribe so you aren’t tempted by news of sales, offers or discounts.
Don’t miss payments. Late payment fees can add up enormously, and if you miss payments too often, your creditors may take away the option of paying in installments. Make payments on top as often as you can. If you really can’t make a payment, contact your lender as soon as possible. If you’re honest and give them some warning, they may be more open to arranging another payment date for you, so you don’t have to pay late.
Cut the cost of daily expenses. Shop around for new quotes for your insurance and any utilities so you know you’re getting the best deal you can. A cheaper option could save you a lot of money, which can be poured into debt payments.
Use your savings for debt clearance. After an audit of your finances, you should have some more spare money than before. Don’t be tempted to spend this new cash, and instead put it straight towards your debt. When your debts are paid, keep up your good financial habits and you can enjoy the extra funds then.
Get into using coupons. If you keep a close eye out, you can find great deals on the things you would buy anyway. Don’t be tempted into buying something you don’t need or want just because it’s on offer. Use coupons and deals to buy things you would buy anyway.
Shop secondhand. If you’re a parent, you’ll know that children grow out of clothes as fast as you can buy them, and they outgrow toys nearly as fast. If you can, pick up some of their clothes and toys from thrift stores to save money. For adults, thrift stores can be great places to shop for clothes, books and DVDs.
Swap dinner out for dinner at home. Going out for dinner is a treat, so cook at home instead. Instead of going out, why not invite friends round for dinner? If you’re trying to save, suggest a potluck party, where everybody brings a dish. It’s cheaper for everyone, but you still get to see your friends.
Head to the library. If you love to always have a new DVD to watch or a new book to read, give up buying them and save a fortune by borrowing them from the local library instead.
Write a grocery list. At the weekend, sit down and plan your meals for the week ahead, make a shopping list, and then stick to it. Avoid buying things you don’t need, and resist the impulse buys.
Try and save money on your hobbies. Are you spending a lot of money on club memberships or supplies that you could give up in favour of cheaper hobbies until your debts are cleared?
Find a free way to get your entertainment. Going out to have some fun at the weekend can be a pricey activity. Instead of doing expensive things like the cinema or bowling, find something free to do. Look for out free concerts or movie screenings in your local area. Go on a bike ride or take the kids to play in the park. You can have fun without spending money.
If you can, sell your car. You will earn some money to put towards debts from the sale, and you will save on the costs of running a car. Taking the bus or walking is much cheaper than running a car.
Say goodbye to your credit cards. Cards are a big temptation that can easily lead to overspending and even more debt. Get rid of the cards, if you can. If you need a card for emergencies, keep one, but don’t keep it in your wallet. Keep it somewhere it safe at home, where it will be harder to use on impulse.
Switch to cash instead of cards. Set a budget for the week, and draw out that amount of cash to use throughout the week. For some people, physical cash feels a little more real when you spend that instead of paying with plastic. It may encourage you to think harder about what you spend.
Don’t try and keep up with friends on a higher budget than you. Don’t be lured into spending more than you can afford because you’re trying to keep up. A good friend will understand that you’re trying to save and will be happy to do some cheaper things with you in order to help out, if you can’t afford a blow-out night.
Avoid the debt spiral. If you live above your means, it is all too easy to get into a cycle of borrowing. You overspend and can’t afford the monthly outgoings. You borrow some money to fill that gap, but when you pay it back, you’re left short again and need to borrow more. Avoid the debt spiral by not borrowing to get out of debt. Think long-term and learn to leave within your means.
Find out if you’re entitled to any benefits. If you are on a low income, have children or are out of work, you may be able to claim some benefits. Find out what you may be entitled to in order to bring in some more income that can be used to pay down those debts.
Check your credit report. Keep up to date with your credit history and your score, you can quickly deal with any problems. Correct any errors and look out for problem areas that you can begin to work on. If you’re informed on what your credit history looks like, you can get an overview of your debt troubles to help prioritise how best to handle them.