Debt is very common nowadays. Your house, car, furniture and even groceries can be bought with credit. If well managed, credit can be a very useful tool. Unfortunately, most of us will go through hard times during their life trying to reduce or eliminate debt. There are steps you can take to eliminate debt and remain out of debt by changing your budget and habits.
Make a Budget
The number one priority when it comes to money is making a budget. Easier said than done, right? There are many tools online to help. You can also keep it simple and make your own Excel spreadsheet to see where you’re at and where you want to go!
Look for Professional Help
Learning about finance is a personal responsibility. You should always be aware of what is going in and out of your bank account. However, huge debt gets overwhelming and a professional can help you get back on track. Your bank advisor or a debt solutions company like Trust Deed Scotland can easily guide you.
Track All Your Expenses
To know if your budget makes sense, you’ve got to know what goes out of your account and why. Keep all your invoices and match them with your bank report. This step is probably one of the hardest. It’s a reality check and can be hard to accept. It’s the best way to know where your flaws are and what you need to work on.
Review Contracts
Time to find some savings! Make sure you pay for what you really need or want and not more! It might take some time to do, but it will pay off. Insurance (car, house, life), phone, Internet, TV bills and plans, etc.
Cut Some Expenses
Now that you track them, you probably have a better idea on where to cut! Put a limit and stick to it for unnecessary bills: restaurant, clothes, coffees, personal beauty care (massage, pedicure, etc.), sports or activities, etc. If possible, try to change your expenses into something that is free. For example, you might exchange your membership at the gym for a at-home training for a little while. Keep in mind to set-up reasonable expectations. Don’t get too frustrated by cutting all expenses. One step at a time tends to pay off more.
Reduce Your Credit Limits
Call your bank and credit cards company and reduce the amount you can borrow. That will help for the future and be very encouraging to see the numbers go down!
Add Money In!
Look for side income or a second job if possible. This is a temporary solution, but one that can make a huge difference.
Save 10% of Your Income
If 10% is not possible right now, save as close to it as possible. Why saving when you’re in debt? Even if you have loans to pay, you also need to prepare for retirement and harder years. Also, a penny saved is NOT a penny spent! Interest on savings creates more money in your pocket!
Perseverance and Resilience are the Keys
To make sure you succeed at reducing or eliminating debt, you need to persevere! A plan can not be proved wrong if not tested well. Accept it is not easy, accept it is uncomfortable, accept to be humble. That’s resilience.
Stop Caring What Other People Say or Think
Don’t spend to preserve a certain image or because of peer pressure. Let them think and talk. Do YOU want to get out of debt? Then go for it, no matter what!
