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(collaborative post) The thought of debt can be pretty depressing. No one likes to be in debt although many of us are.  It’s a necessary evil that we all need to learn to keep under control.  This could be from student loans, card repayments a mortgage, but, whatever the debt, there is a severe risk of it snowballing and overwhelming your life.  This can have a knock-on effect, affecting our health and mental well being.  Being in control of your finances and get a handle on your debt can not only put you in a stronger position to manage your remaining debt but also affect your mental health in a positive way.

Be Organised

Having an organised approach to finances means that you can stay on top of all in and outgoings.  In order to do this, you’ll need to collate all your details for your various debts, money coming in and out into a spreadsheet.  Make sure you have this backed up!  It’s like a diary for your money, everyone seems to like diaries.  Keep it simple, you really don’t need anything overly complicated, do what works for you!  Quickbooks is one of the easiest and most popular accounting software packages to help you manage your finances.

Record when payments are coming in and going out.  Dates and interest rates are important. This way you know what position you are in financially and are better equipped to start addressing the situation.  Having everything in a spreadsheet can help you focus on prioritising payments.

Pay Off More Than the Minimum Required

This may be easier said than done but in cases where you have extra funds, it can benefit you greatly.   You’ll be amazed at how much faster debts will reduce if you pay more than the minimum.  So watch that spreadsheet, if it tells you there will be money at the end of the month make it work for you. By spending the money to pay your debts you effectively save money on your debts as they’ll be paid off faster and you’ll pay less interest.  Able to double the minimum payment? You’ll pay off your debt in half the time and lower your stress levels!  This is on the provision that repayments are flexible, not always the case with loans but generally offered for card repayments.

Prioritise Payments

Once your spreadsheet has been created and the information inputted you can begin with prioritising payments. Target those that charge the highest interest rates.  By paying off debts that will cost you the most, you’ll save more money in the long run.  Keeping track of your money in this way allows you to know if you have any extra to put towards bulk payments of debts or a treat that may be long overdue. Knocking these down and then off the list can be a huge relief and gives a sense of achievement.  Whilst doing this it helps to pay the minimum for all the other debts so as not to overstretch yourself.

Reevaluate Your Budget

Controlling your budget may feel like a tedious task and is also more complex for us self employed individuals who don’t know where our next payment will come from.  By having a fixed budget, this can be flexible by the month.  You’ll find that you can free up more funds for faster debt repayment.  Be strict with your budget and you will find you free up more of your income to use effectively.

Analyze your spending, identify payments for services you don’t use or no longer have need for, such as old subscriptions that you have completely forgotten about.  Stopping these can save you at least £5 every month. Whilst this may not seem like much, adding it to your minimum payment will speed up your debt repayments.

Debt Relief Services

Some debts are more manageable than others.  In some cases, it can feel like you’re drowning and there is simply no way out of the situation.   In such circumstances, you could consider debt relief services.  These offer assistance to help you manage your money better and pay off debts.

There are a variety of services available, and you can look at things such as DTSS.us reviews to get an idea of what they can do for you.  Beside debt relief, you can also use them to improve your credit score, which could have taken a hit while you have struggled to pay off debt.  For many, this is a last resort, but knowing it is there just in case will give you more confidence.

Financial Freedom

Paying off debt takes discipline and dedication.  You’ll feel amazing once everything is paid off especially if it has been a long and difficult struggle.  You can focus on growing your savings so you can look forward to a brighter financial future.  You might find my post Things We All Need to be Saving For an interesting and useful read.

What are you doing to free yourself from Debt?

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Written by Melanie Edjourian.

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