Today I want to talk to you about debt.
It’s a horrible word that fills me with anxiety and I’m sure it gives a lot of you out there the same reaction.
With Christmas just around the corner, it’s a common time for us to start paying for things on our credit cards and taking out loans.
Christmas presents and decorations, the big family food shop, all those parties too!
Once you start whapping things on plastic, it becomes habit. One that is very difficult to stop.
It’s not just Christmas, lots of us have all sorts of reasons why we end up in debt.
What happens if you lose your job or have unexpected costs crop up out of nowhere?
Getting into debt is one thing but it’s important to start thinking about a repayment strategy before you end up in too deep.
Trust me, with careful planning and a few savvy new habits, it is absolutely possible to live a debt-free life.
Let’s get those debts eliminated!
The Debt Snowball Method
This method is the easiest to organise and a really good place to start getting to grips with your debt.
I’ll admit, though, it can be a little tricky to come face to face with the figures if you:
- A – aren’t the best with numbers
- B – you’re not quite ready to look at how much debt you actually have
But you’ve got to face it at some point!
Luckily, there are a few places you can find a debt snowball calculator online and they will do all the hard work for you.
How Does The Debt Snowball Method Work?
The basic idea is this:
You make a list of your debts from smallest to largest, taking into account the interest rates and then you start paying off the smallest first.
You then continue to make minimum payments on the larger debts but concentrate your efforts on overpaying the first debt.
Once the smallest debt is eliminated, you can move on to the next one.
Now you will have more funds to spend paying the next one off.
It’s a big confidence booster and it makes you feel like you’re finally achieving something by eliminating one debt at a time!
Scrimping & Saving
In order for the debt snowball method to work, you will need to scrimp and save wherever you can in order to make the overpayments.
This is the tough bit!
When you are already living on a super tight budget, finding even the smallest amount to save can definitely be a challenge.
It helps to start tracking your expenses and put them into categories such as:
And so on.
This will show you where you might be able to save some money.
Changing your utility suppliers is usually a good place to start but you might also consider not buying any new clothes for a couple of months or swapping to a cheaper grocery store and cooking batch meals for the week.
Anything you can do to save more, the faster you will be able to repay your debts.
Side Hustle Your Way Out Of Debt
A ‘side hustle’ is an American term but it’s making its way across the pond!
Lots of people here in the UK now have side hustles, aka side jobs and hobbies that earn an additional income.
A few pounds here and there might not feel like much but when you are tightening your purse strings, it can feel like a lot.
Ebay is definitely your friend and will help you clear out your clutter too as an added bonus but there are plenty of ways to earn cash on the side.
Seasonal work is a great way to find a few extra hours in the week but only if you have enough time to dedicate to it.
Similarly taking on a cleaning job in your local neighborhood could be enough to scrape by.
If you have professional skills like bookkeeping or graphic design abilities then a site like People Per Hour could work wonders for you.
Once you start looking there are all kinds of ways to earn a little extra here and save a little more there.
It will take time, patience and determination but the important thing is to keep going and stay positive.
You’ll soon eliminate your debt and get back to a healthy bank account!