The problem with debts is that the whole process can be confusing, scary and absolutely overwhelming. Even the word itself holds a lot of weight. Which is why many people avoid dealing with and facing up to the debts that they have. But, the sooner you start, even in the smallest way, the sooner you will start making progress. There are a few methods that people use to pay off their debts. One of the most popular techniques is the Debt Snowball method. But, in reality, you have to do what works for you and your circumstances.
Some of the Snowball Method is just good sense, so there will be nods to some of the method in this post.
One of the most important things you can do in the whole process is to sit down and gather all of your debts. Write them all in a list, and write the amount next to each one. If you are a stickler for details, you can write the interest rate too.
This helps you visualise the task ahead. If you include the interest, you’ll be able to see which ones are costing the most over time too. Put them in an order that makes sense to you. You could go the largest debt to smallest debt, or largest interest to smallest.
The chances are you do have some smaller debts on the list. And, those are the fastest to knock out.
Once you have a real overview of how much you need to pay back, you can work out what is actually possible. Your budget may dictate that you can only pay X amount across the list. So you’re going to have to look at a few options. Calling and talking to each of the companies, and explaining that you can only afford a set amount per month is usually enough to come to an agreement. In some cases, you can work with a debt company to help you lower the overall amount, or negotiate a better repayment plan, student loan debt is one of the areas you can seek help in.
One of the things that people google most is how to get out of debt fast, or how to hammer down debt quickly. It is smarter to go into this, knowing that if you owe thousands, but can only afford £/$10 a month, then it is going to take a while. In the early days, you can start implementing changes that will help you free up some money elsewhere that can then be put back into paying off the debt.
Just try to be realistic, it is going to take time – but you will get there in the end.
Living More Frugally
While there is no single thing on the list that is going to free up hundreds, when you use a combination of all of the methods, you’ll find that smaller amounts add up over time.
You’ve already spent time making your budget, here is where you will be able to see it in action and see where you can actually make some cutbacks or some cash.
It is estimated that we all have thousands of dollars worth of items in our home that we don’t use. Some packed away in storage boxes that never got unpacked when we moved. Others in cupboards that we don’t go in. So it might just be time to start going through everything that you have and don’t use. You can use sites like Gumtree, Craigslist, and Facebook Marketplace to make some quick sales. eBay is okay, but you’ll be likely to pay fees which will cut into your sale price.
A big issue is impulse spending. Seeing something we have to have and buying it there and then – no matter the consequences. Often being seduced by a discount price tag or limited edition label. The problem is, impulse buying is regularly buying things we don’t want, with money we can’t afford to spend. So if you happen to be shopping, and spot something that triggers your impulse buying, take a photo, and set a thirty-day timer. If at the end of the thirty days you still want it then do the following:
- Can you afford it
- Do you need it
- Will it make a positive impact?
Even while paying debts back, you should be able to get things for yourself. Debts don’t make you a bad person or unable to enjoy life.
Cut The Cards
While you have credit cards, you always have the ability to spend on them. So it is time to give up the ghost and say goodbye to the tiny bits of plastic.
Any hobby can technically be called expensive when you have other things to pay for. While there aren’t many hobbies that are free, there are some changes you can make to the hobbies you do now. If you are a craft lover, but not using the materials you are buying, or a golfer with a pricy membership, then it’s time to make a switch. If you want to continue doing what you love, find a cheaper way to do it. For example, cruise through Freecycle for people getting rid of crafting bundles – or other hobby items.
It cannot be stated enough how great meal planning can be when it comes to your grocery budget. Over buying and then having a lot of food waste, is pretty much money being thrown in the bin. Under buying will mean a lot of last-minute top-up purchases during the week. Making a weekly meal plan, and sticking to it, will mean your shopping bill will be reduced, and your food waste too. If you find that when you are in the grocery store, you love to throw a few discounted items into your trolley, just because they are on offer, then try shopping online and taking the time to compare all of the prices before you click the buy button.
When you have money in your hand, and you have to hand it over instead of beeping a card in a machine – money is more real. Dealing with your money visually can make a big difference when it comes to frivolous or excessive spending. It is a little more complicated in an age where practically everything is hooked up directly to your bank account.
There are a few things you can do to actively bring money in that doesn’t involve selling your own stuff. If you have some free time, then you might like to consider putting it into a part-time job. Food delivery companies are hot right now, and they pay a reasonable amount per hour. All you’ll have to do it take it from the restaurant to the door in good time. You’ll need to be willing to give up a few evenings a week, but for the extra cash? Worth it.
The other option is to create a business from home. We all have skills that are useful to others. Perhaps you have an excellent eye for detail like spelling and grammar. Proofreading, editing or content writing are popular options. If you have a stash of things you have made, then see if you can make some cash online selling them. There is a whole world of online gigs that you can pitch and earn for. Make sure you are working within all rules and legal things though.
Debt is something that can have a substantial mental and emotional impact. So when it is affecting a couple, things can get tense. Support can often play a key role in making sure you are staying on track. You can find many online debt advice and support forums, that will have people who are paying down debts from a few hundred to a few thousand. They are great places to find extra tips, support and share when it gets a bit much. As well as finding information about how to deal with debt collectors and pushy phone calls.
Because debt can have such a profound impact, be sure to check in on yourself from time to time, to make sure that you’re doing okay too. It can be so easy to get into debt, but take years to get out from under it. So take action, stay focused, set goals (both big and small) and make more modest changes in your lifestyle to accommodate for your new debt-free life.