No one wants to be in debt. It’s stressful and, when out of control, can hang over you like a cloud, coloring your everyday life with anxiety and fear. When you’re struggling to make even minimum payments, it can seem like there’s no way out of the cycle.
Yet despite all this, the amount of debt among people in the UK is on the rise. This goes for everything from mortgages to credit card debt to private loans. And while having a mortgage is not a problem in itself, it can become so if you find yourself struggling to make ends meet each month.
So, how do you get out of debt as quickly as possible? These methods can help.
- Don’t just pay the minimum payment
It can be tempting, when your credit card bill arrives, to simply pay the minimum and stop worrying about it until next month. However, when you’re just paying the minimum, that debt is hardly being payed off at all. You’re essentially paying interest, which accrues each month, while paying down very little of the initial debt. In this situation it can takes years and years to finally pay off a credit card.
The ultimate goal should be to get to a place where you can pay off your credit card bill in full each month. In the meantime, any amount you can pay that’s beyond the minimum is good progress.
- Make a budget and stick to it
If you’re serious about paying off your debt, you need to start freeing up more funds in your budget each month to go towards payments. That means creating a shoestring budget broken down by category of spending and then following it each month. Sometimes this will mean going without or putting off purchases until the next month, but you’ll be building the skills you need to live within your means and keep debt away long term.
You’ll need to cut down on things like eating out, new electronics, and other non-essential items, but those nights spent cooking at home on the cheap will be well worth it in the long run when your debts are paid off and you’re able to start building up some savings and living comfortably.
- Cut down your housing expenses
If your rent or mortgage is over about a third of what you make each month, it’s too high. That’s money that could be going to pay off your debt.
Consider finding somewhere with cheaper rent, or getting a flatmate– or both. If you’re a homeowner and your mortgage is too high, it may be time to sell your house for something with a more manageable cost. You can downsize or move to somewhere with a lower cost of living. Here’s how to sell your house fast, so you can stop paying your high mortgage quickly and pay down your debt faster.
- Get a second job
It may seem obvious, but increasing your income will let you pay your debt off faster. If you already work full time, getting a part time job even for just a few hours a week creates a stream of income that can go completely towards your debt. This can be anything from working at a coffee shop to being a tour guide during the high tourist season. There are many seasonal jobs that you may be able to pick up just for a couple of months to help generate some more income.
It might not be easy to fit more work into your schedule, but think of the difference an extra £500 or £800 a month could make. You don’t have to do it forever, just until your finances are in a better state.
- Try the snowball method
When you have a lot of different debts, it can seem overwhelming to even get started. The snowball method is when you start by completely paying off your smaller debts, and work your way up to the larger ones. So you first pay off the credit card you owe £200 on, then the one you owe £500 on, and so on (taking care to continue at least making minimum payments on all the them in the interim). As the number of debts you have goes down, the situation becomes more manageable and you’re able to put all your focus into paying off your largest debts.
With this advice you’ll soon be on your way to a debt-free life. Paying off debt takes hard work, but it is possible and incredibly worth it.