Being in debt can be a stressful experience for anyone. It isn’t easy when you know that much of the money you earn will go straight to someone else until the day your debt is paid off and you’re debt free.
However, not all debt is ‘bad’. Mortgages, for example, are essential for the vast majority of people who want to buy a house, while a car loan can give someone the mobility they need to take a new job.
But many debts don’t really lead to anything – and can quite easily be avoided. Sometimes, all it takes is the right approach to budgeting.
Unfortunately, good budgeting skills aren’t always enough. A change in circumstances, such as a fall in income or a rise in expenditure, can easily turn a manageable monthly payment into an unaffordable challenge – which can lead to serious debt problems.
So how could you clear your debts and become debt free?
Well, the first and most basic thing to do is create a budget. You will need to write down everything you earn/receive in a month – salary, benefits, grants, etc. Then write down everything you spend each month – for example, rent/mortgage, secured loan payments, utility bills and day-to-day living expenses. Make sure you keep careful track of your non-essential spending.
You should now be able to see where you are spending money you should be using to service your debts. It may be a good idea to add up all the ‘potential savings’, as it’s easier to make cut-backs when you can see exactly how much you could be putting towards your debts. Remember: every pound you repay is a pound that won’t be gathering interest any more.
If, after accounting for all your essential expenses, you are left with some ‘spare’ money, you could put this towards your debts and ‘overpay’ them – meaning you will be debt free sooner.
If you are struggling with your debts, you should contact a professional debt adviser without delay. They may be able to suggest an appropriate solution to your problems and help you become debt free sooner.
Oliver Hughes has written numerous debt related articles and specialises in mortgages and loans.
