Is debt a part of your day to day life? Are you spending your days wishing for a debt free life but nothing seems to be really changing for you?
If so, you’re not alone. There are many people in debt plodding along, trying to get out of debt (at least it feels that way) but without making much progress.
The hubby and I spent years in debt wishing that things would change – hoping that some kind of financial miracle would come our way.
Surely we were going to have a little win on the lottery or our house would magically increase in value leaving us a small fortune to do what we liked with. Of course, it never happened! We believed for a long time that we were destined to be in debt for the best part of our lives.
And then one day, we had our wake up call. We knew then that getting out of debt was our priority and there was nothing we wanted more (except good health of course)!
Do you want a debt free life?
If you want to get out of debt more than anything, let this be the last day that things stay the same for you. The chances are that you could go above and beyond what you’re already doing and really make some headway in getting your debts paid off. Let this be the last day that you make excuses! Today, why not start tackling your debt for real and give yourself a chance at a debt free life?
Here are five steps that you could take now to start clearing your debts
Step 1 – Review your finances
Do you know where your money is going? If not, find out now. Get online banking if you don’t already have it and start tracking your income and expenditure. I use a tracking spreadsheet to forecast how much money will be left in my bank account at the end of every month. I list the dates that my bills will go out of my account and have categories for different areas of spending. I also check my bank balance every day to make sure that the numbers tally up. If they don’t, I can instantly see why and do something about it.
Having a forecast for any leftover money will mean that you can anticipate how much you can pay extra towards your debts.
Step 2 – Decide which debts you’re going to tackle first
Write the details of all your debts down – your creditors; the balances; the minimum payments and the interest rates. Work out whether you’re going to tackle the highest interest rate debts first or perhaps the smallest debts first if you want to follow the debt snowball plan like we are. I’ve listed all ours in a spreadsheet so I can see the debt total coming down each month.
Step 3 – Start cutting back on your bills
Whilst you’re checking your bank account, make a note of any bills that you can cut right out of your budget. Do you really need that ‘all singing all dancing’ pet insurance? Perhaps a lower level of cover will be just what you need. Get rid of any unnecessary subscriptions and take some time to make sure you’re getting the best deal on your utility and phone providers.
One big area that many people can cut back on is food shopping. If you find yourself doing top up shops every other day, then maybe you could plan your food shopping more effectively so that you just get the things you really need in your monthly shop. Plan your meals, cook in bulk and freeze. You’ll be surprised at how much money you can save.
Step 4 – Cut up your credit cards
One good way of making sure you don’t accumulate any more debt is to make spending on credit harder for yourself. If you’ve decided that you really do want a debt free life, cut up those cards (and if you have an emergency savings fund, you could cut up the card that you keep for emergencies too).
Step 5 – Make an extra payment towards your debts
If you’ve checked your bank and know how much money you’ll have leftover at the end of the month, why not make an extra payment towards your debts today? You’ll feel on top of the world when you’ve done it. If you can only afford £10, that’s ok, make the payment! Even the smallest start is the most important step in the right direction.
You could even start a debt free diary on the Money Saving Expert Debt Free Wannabe Forum. It’s a great way to keep motivated and track your progress with like minded people on hand for support.
What say you? Will you change the state of your finances today?
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Image courtesy of Free Digital Photos – “Act Now Key Means Do It Take Action” by Stuart Miles