Sometimes, getting into debt is inevitable. Perhaps you have bought a house and required a mortgage, bought a new car on finance, or needed to use your credit card to make essential repairs to your home when you didn’t have enough money in the bank. But debt can quickly spiral out of control and easy access to credit cards, hire purchase agreements, and other forms of lending today can see people quickly finding themselves buried under more debt than they can manage.
Being in a lot of debt can hold you back in several different ways. It can affect your credit rating, which in turn could make it difficult for you to do things like rent or buy a house, get a car on finance, borrow money when you really need it, or even hold you back from working in certain jobs. Being in debt can also have a profoundly negative effect on your emotional health and wellbeing, causing you to be more stressed and anxious than you normally would be, and leaving you feeling depressed when every penny you earn from working hard has to go on paying off debt.
But the good news is, it doesn’t have to be that way. Even if you have found yourself in a situation where you are struggling with debts, there are several strategies that you can use to get yourself out of the red and enjoy financial freedom once again.
Consolidate Your Debts:
If you have several small debts that you are paying off individually, consolidating them is often the best course of action to take to repay them and get yourself out of the red faster. A debt consolidation loan will provide you with the funds that you need to repay all of your existing debts in full, leaving you with one single, more manageable debt to repay instead. Since you’ll only be paying the interest on one debt, it often works out cheaper too. If your credit rating has suffered as a result of your debt, a loan for bad credit can help. New Horizons published this guide to help you get out of debt with a bad credit loan, which you might find useful. New Horizons is a UK-based credit broker working with a panel of trusted lenders to help you find the right loan for you.
Contact Your Creditors:
If you are struggling with repaying your debts, don’t leave your creditors in the dark. Lenders are equipped to deal with borrowers who have fallen onto hard times and will be able to put strategies in place to help you manage your repayments better, whether it’s a payment holiday, interest freeze, or reduced payments for a certain time to help you out.
Try the Debt Snowball Method:
The snowball method is a tried-and-tested way to repay your debts and works by paying them in order from the smallest to the largest. Start with repaying your smallest debt and once that is paid off, you will then put the extra money freed up now that you no longer have to make monthly payments towards this debt towards the next one up in size. Then pay off extra each month until that debt is cleared. Repeat this for your debts in order of size, while continuing to pay the minimum payments on all other debts, until you finally clear off your largest debt and are out of the red.
Make a Budget:
Taking the time to sit down and create a budget of all your incomings and outgoings will make it easier for you to manage your debts. You might find that there are expenses you are currently paying for that you are able to cancel, like a gym membership you never use or insurance for a gadget that you don’t need anymore to free up money that you can put towards repaying your debts instead. And, having a clear budget available will be very helpful if you need to contact your creditors for help and support since they will want to see how much you are able to comfortably repay.
Boost Your Income:
Bringing in some extra income can help to provide you with a little bit of breathing space when you have more funds to put towards your debt without running out of money before the month is over. There are plenty of ideas that you can consider to boost your income, whether you buy and sell products for a profit, sell your own unwanted stuff on eBay, or find freelance work that you can do online.
Being in too much debt can be harmful to your wellbeing and hold you back from achieving what you want to in life. Thankfully, you don’t have to struggle with debt in silence – try these strategies to get out of the red as quickly as possible.