Debt has become the norm in everyday life for the majority of the population and conversations about how to get out of debt are becoming more common. If you are one of the majority of people out there who want to get out of debt and change their life for good, here are 7 tips to help you work towards a stress free and financially secure future.
Get real!
Most people are in denial about how much they owe but its not until you actually see all the figures written down that it really hits home. Its very important to admit how much you owe and not to kid yourself, especially if you smaller debts, i.e. store cards, payday loans or overdrafts. Most people never end up getting out of debt because you lure yourself into a false sense of security.
Plan for the future
Paying your creditors is only half the battle when trying to get out of debt. The other half is to look ahead for future big expenses and anticipate how to meet them. If you know your car will need a service and an MOT in six months, start putting away some money every month from now on. This type of budgeting evens out the big expenses throughout the year so you have less emergencies and helps you feel in control of your finances while you get out of debt.
Have an emergency savings account
While some people like to have a credit card handy to cover major emergencies, they can’t be used in every situation. if your boiler broke down in the middle of winter how long could you go without heat while saving up because the repairman doesn’t take credit cards as payment? It’s always better to have cash handy in an instant access account for those unexpected situations.
Start paying cash for everything
Fantastic plastic makes our lives so much quicker and easier – and it’s made us get into debt quicker and easier too! To really get a grip on your spending and get out of debt, work out what your expenses are each week and then withdraw that amount in cash. Then leave all your cards at home. Having a set amount of cash in your hand will make you really consider every penny you spend because you know when it’s gone, it’s gone.
Wean yourself off the credit
Being strong willed when it comes to not using credit cards is one of the hardest things to do if we want to get out of debt. Some people find it easier to wean themselves off slowly, and just keep one there just in case whereas others like to go cold turkey and cut up there cards and put them in the bin. Either way if you decide to keep one aside for those ‘just in case’ moments you need to learn to be strong willed. Don’t keep in it in your wallet or purse, keep it out of sight. As they say, out of sight, out of mind!
Make sure you and your other half are on the same wavelength
Just because you’re fired up with enthusiasm about trying to get out of debt doesn’t mean your other half may be. In fact, if your other half has been responsible for building up part of the debt, they may not be willing to stop spending and could sabotage your efforts to get out of debt.
Be creative and find alternatives
When trying to get out of debt it’s important you come up with low cost alternatives to everyday items you are used to spending money on. For example, instead of Starbucks cappuccinos find a way of making your own, use the library instead of buying new books, read free news sites online instead of buying newspapers, and have friends round for dinner instead of going out. Try and come up with as many ways of having the things you enjoy at a lower cost.
Its important to celebrate milestones
Each time you reach a milestone along your ‘get out of debt’ journey, celebrate and reward yourself. Small rewards along the way can be wonderful motivators and keep your enthusiasm high. Choose something that is worthwhile to you, but will fit within your budget and is appropriate to the milestone achieved on your ‘get out of debt’ journey. Examples of motivators might be dinner in a restaurant, going to the theatre, a weekend away, a couple of DVDs or a course at the local college. Not all rewards have to be associated with spending money – choose rewards that will make you happy.
See how you can legally get out of debt by using the Consumer Credit Act 1974 to your advantage. Write off debt for good and look forward to a debt free future.