Debts have a nasty habit of piling up on one another. When one of them starts getting out of control, the others tend to follow suit as you try to adjust your repayments to keep all of the plates spinning. Unfortunately this way of tackling debts is not suitable for paying off debts in the long term – for a start the longer you leave your debts unpaid, the more interest you will incur. The longer this lasts the more money you pay back over time – the solution to this isn’t trying to keep the plates spinning, it’s removing the plate entirely.
Work out how much you owe
So how do you effectively minimise your debts this year? The first step to this is, of course, working out how much you owe. Sit down and look at all of your debts, both secured and unsecured, and sort them by order of priority. Any secured loans which could lead to you losing your home should be given the highest level of priority and should be dealt with first.
Work out how much you can repay
Once you have a figure that you can work towards paying off you can start figuring out how you’re going to make your goal happen. Start out by writing out a monthly budget covering all of your spending – food, gas, bills, clothing, fuel and everything else. Once you know how much you have left at the end of the month you can figure out how much you can repay per month, and thus how long it will take you to pay it back. If these numbers aren’t to your liking, go over your budget with a fine-toothed comb and see where you can cut out the fat. Anything you can save money on can help you pay off your debts that little bit quicker.
Look for passive income
One of the ways you can find more money to repay your bills with is by increasing your income. With many of us working full time jobs, this could seem a little difficult to say the least. Fortunately there are many places you can sell your skills online, with sites like Udemy being one of the quickest and easiest ways to generate a passive income over time.
Ask for birthday presents in the form of money
Another way you can boost the amount coming in is by asking your friends and family to simply put their presents together in the form of money in a pot. Rather than this all going towards a new 4K TV, if your friends and family know that this is going towards the goal of getting debt free, this is something that they should all understand and admire. Remember, every little helps.
Consider loan consolidation
If all else fails, loan consolidation is well worth taking the time to consider. By consolidating all of your unsecured loans into a single umbrella payment you could wind up debt free a lot, lot quicker than if you just try to muscle your way through it. There are several different ways you can go about doing this, from IVAs in England to applying for a Scottish Trust Deed in Scotland. With multiple loan products around to help you get out of situations like this, it’s well worth shopping around – just be sure that you get your loan advice from someone who is financially regulated to ensure that everything is above board before you sign on the line.