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6 Tips for Getting Out of Debt

Financial problems and debt have always been a common issue faced by most of us at some point in our lives. However, over the last 18 months, COVID-19 has only exacerbated the debt problem. With many Brits losing their jobs or being furloughed, the UK has seen a major increase in the number of people suffering from debt. Citizens Advice data shows that around 6 million adults have fallen behind on bills during the global pandemic.

Here at Debt Movement, we understand that debt is difficult to deal with both financially and emotionally. It can sometimes feel like an isolating experience you want to keep secret, but it is essential to remember that nothing is embarrassing about financial difficulties. At Debt Movement, we understand that bad debt happens to good people, and that is where our expert advice and professional services can help lighten your burden.

As we are hopefully now starting to see the beginning of the end of the coronavirus pandemic, now is the time to regain control of your financial future and follow our 6 tips for getting out of debt.

1. Write down Your Debts and Prioritise Them

The first step to tackling your debts is to make a note of all the money you currently owe. This can seem like a daunting task but believe us, facing your responsibilities head-on is the only way out of financial difficulties. It is also essential to write down all the money you currently owe so that you can keep track of it all and not miss your repayment periods. Don’t forget things you have bought on store cards that don’t get added right away as these can sneak up on you later.

Prioritise debts that need to be paid back first, once you have a record of them,  work out which ones you have a little more wiggle room with.

Prioritising your debts doesn’t just mean paying back the largest amounts first. Instead, make sure that you keep up to date with important payments like your rent, mortgage or utility bills to ensure that you continue to have a roof over your head, water and electricity. 

Next, you should pay off the debts with the highest interest rates to not pay back way more than you have to.

2. Make a Budget or Spending Plan

It is important to know exactly how much money you have coming in and how much is going out. Having a budget as a way to manage your finances sounds so simple yet not many people do it effectively, which can cause problems especially when it comes to repaying debt.

Once you understand your finances, you can start making a budget or a spending plan. Look at your expenses and try to find ways to limit your spending. Is it possible to cut down on your phone bills or morning coffees? If so, this is a great place to start. After that, you can look around for cheaper alternatives to the services you already use. Many of us don’t even realise that we are paying more for our utilities or television plans than we need to be. 

Developing a smarter spending plan will leave you with more cash in your pocket at the end of the month which can go towards repaying your debts or saving for a brighter financial future.

Download our FREE personal budget tool in Excel here. 

3. Look for Extra Income

If you find that your regular income doesn’t cover your outgoings, it might be an excellent time to explore the option of gaining an extra income. 

You can do this in a couple of different ways. First of all, you can look at things in your home you no longer need or want and see if you can sell them – sites such as eBay, Shpock, Gumtree, Facebook and other platforms are designed to help you boost your income by selling unwanted items. . This could be a huge help for many people when getting out of debt, even if it is just a short term solution that could stop you from paying large amounts of interest.

Another thing you can do is to check to see if you are entitled to any benefits. You may be surprised to find you have entitlements that you didn’t know about. Government help and support is available for those affected by the coronavirus pandemic, so why not see if you are eligible?

4. Take Care of Your Mental Health

Although it may not be a tip for getting out of debt, it is of the utmost importance to remember to look after your mental health and emotional well-being if you’re suffering financial difficulties. 

It is common for people to feel a considerable amount of shame and isolation due to debt stress. Debt, however, is not something to feel embarrassed about. Make sure you get professional medical help if you find it too much to cope with, and continue making healthy choices, such as meeting up with friends and family and maintaining your exercise routine. When you are in a good place mentally, you tend to be more successful in getting out of debt.

5. Get Professional Help

It is always okay to ask for help. However, getting out of debt can be complex and sometimes, professional experience is required. Debt Movement can offer expertise, debt guidance and solutions to help you take back control of your financial future.

Debt Movement offers a range of debt solutions that have helped over 35,900 people move out of debt to date.

6. Consider Debt Solutions

Although terms like individual voluntary arrangements, bankruptcy and debt consolidation can sound confusing or just downright daunting, we are here to help. It might be that you need something a little more structured to help you deal with your debts so it’s important for you to consider the available debt solutions

We can talk you through all of your options which will be tailored to your circumstances and include:

This is a legally binding agreement with your creditors to pay off an agreed sum of money over a fixed period of time or as a lump sum. At the end of the repayment period, the remaining debt will be written off.

A legally binding agreement that allows you to resolve your debts. There are a number of consequences of bankruptcy which might include the sale of your assets so for this reason it is generally considered a last resort.

When dealing with multiple debts you can combine them all and take out a larger loan with lower interest rates, which you can use to pay off the other loans. This means you have 1 creditor to pay each month rather than several.

This is an informal arrangement with creditors that enables you to pay a smaller amount of money over an extended period of time. There is no debt write off so you will continue to pay until all of your debts are paid in full.

An alternative to bankruptcy for individuals who have minimal disposable income and little to no assets.

So there you have it; we hope that our top 6 tips for getting out of debt will help you as you manage your finances. Whether or not you choose to deal with your debt on your own, we are always available to offer expert advice.

If you are struggling to pay your debts, Debt Movement is here to help you manage your debt. Request a free call back today and learn how to manage your money better.

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