Living with debt is incredibly tough. When you are struggling with repayments you can easily find yourself in an endless cycle where it feels like you are never quite getting your head above water. It has been particularly difficult over the last year or so, as a lot of people have found themselves out of work or facing unexpected expenses during the pandemic. Side hustles have dried up, steady jobs have either placed us on furlough or laid us off completely, and those bills haven’t stopped.
However, it is important to remember that there are always ways to make your path out of debt a little clearer. It may not always be overnight, but with patience, preparation and a little creative thinking, you should start to see a clearer way forward. Things are finally starting to look up on the job market too. If you feel like the peak of your personal mountain of debt is out of sight no matter how hard you climb, here are a few tips to help you get there.
It’s Time To Get Organized
One of the main reasons why debt can feel so overwhelming is because we don’t have a firm handle on it. After a certain point, it almost starts to feel meaningless, this horrible mess that we have to live with because that’s the way it has always been. A lot of people also have a tremendous anxiety about debt, and they start to feel like the best thing to do is to not look at it. Well, the sad truth is that debts aren’t going to go away just because you ignore them, but the good news is that the better you understand them, the easier they will be to manage.
So, start by getting your payments in order. From the big, looming debts to the small repayments that should be taken care of in a week or so, the best way to start is by having a clear idea of how much you owe and how much money is going out of your account every month. While you are at it, put together a detailed accounting of your monthly earnings and spending beyond the debt repayments. We’re talking about everything from the weekly grocery stop to the morning cup of coffee.
Can You Make Bigger, Or Earlier, Payments?
Instinctively, the answer to this question is always no, but it’s worth seriously considering whether you can get proactive with your debt repayments. Now, some loan providers charge a prepayment penalty so it’s always worth double checking this beforehand, but if the provider is happy to be paid early, you could be looking at a nice reduction in interest as well as getting towards that final total more quickly.
Start Trimming Your Spending
One of the easiest ways to get ahead on your debt is to start making savings elsewhere. That monthly budget that we just talked about? Take a good long look at it and see where you can start trimming. The morning cup of coffee is a classic example given by people who have a lot of money to spare (you know, the people who think millennials are spending all their savings on avocadoes), but it is the kind of small expense that can add up to quite a lot. Try to keep your energy bills low. Cancel subscriptions that you are not using and get thriftier in your shopping habits. We all have those expensive hobbies that cost us a little (or a lot) more than we’d like to admit.
If you want to hit those debt repayment targets sooner, it is probably worth thinking about whether you can hit pause on those, at least for the time being. And if you have a particular weakness, be it a favorite store or online shopping sales, then you need to think about what you can do to minimize the risk of temptation. Can you limit your internet time? Maybe it’s worth thinking about putting the credit card away before you have a drink in the evening (we all know how convincing the “go on, treat yourself” voice is after a glass of wine, don’t we?) Remember that this isn’t forever, but it is important right now.
It’s also worth thinking bigger. Do you really need that car right now, or could you make do with public transport? Do you have a spare room that you could rent out?
Use Finance Management Tools To Look For Opportunities
As much as getting out of debt relies on you getting to grips with your repayments and coming up with proactive solutions, you should not forget that there are a lot of tools out there that are designed to help people with this very problem. Say you’re struggling with credit card debts and you’re finding it hard to keep up with big repayments across several different cards. This is a problem that can seem completely unmanageable, and it can feel like it’s going to keep you in debt forever. But there are apps out there that can show you how to consolidate your debt and get you a better interest rate.
Tally’s debt calculator looks at your credit score, your current credit card balance and APR, and your last monthly payment, and it starts working on finding you a solution that helps you save. Their software looks to set you up with lower monthly payments and less accumulated total interest to start shaving away at the total amount. You’ll be paying less but working off your debt quicker. Visit their website to find out more about how it works and how it could help you.
Look For A New Job Or A Side Hustle
As we mentioned, things have been abysmal on the job market for the last twelve months or so, but they are starting to look up. As more and businesses start to open their doors to the world and the vaccines continue to roll out, there is finally cause for confidence when you are looking for a higher paying job or looking to pick up some freelance work on the side.
If you are finding it hard to secure a role, think about what you could do to broaden your skillset and make yourself a more attractive proposition to employers. If you are looking for a side-hustle to add a little extra to your income, it might be worth designating all the income from it as going to the debt repayment fund. It’s not the most exciting thing to do with your hard-earned extra earnings but future you will thank you.
Don’t Lose Hope
So much of the advice we have given you is about being proactive and being strict with yourself. But it’s all very well and good to tell someone that they need to get better at managing their money and it’s quite another to live through the kind of year that we have just lived through while carrying a lot of debt around. It is important to remember that, as hard and as emotionally difficult as this process may be, there are ways out of debt and there are always people out there who are ready to listen if you are struggling.