Are you struggling with debt? Do you owe money, or are you finding it increasingly difficult to survive from one payday to the next? If you have money worries, here are 5 ideas to help you get your finances back on track.
1. Be clear about your situation
All too often, we bury our heads when it comes to our finances. If you tend to avoid checking your balance when you go to an ATM, or you haven’t read a statement or opened a letter from the bank in weeks or months, the first step to get back on track is to be clear about your situation. This can be a daunting prospect, but it’s crucial that you know where you’re starting from. Take a moment to check all your credit balances, open your mail, and work out how much debt you have, and who you owe money to. It may be useful to calculate your loan repayments to see which loans are the most expensive and which to prioritise over others.
2. Prioritise your debts
It’s very common to be in debt, but this is not always a negative situation. If you’ve taken out a loan or you have a mortgage, and you’re paying off that debt in line with the agreed terms, you have nothing to worry about. The circumstances change when you find yourself in a situation where you can’t meet repayments, you’re struggling to cover bills, and you have debts that have the potential to spiral out of control. If you’re already in debt, for example, the last thing you need is to incur late fees, a missed payment penalty or interest payments that make the original debt unpayable. If you find yourself in this scenario, prioritise your debts and find out if a debt consolidation loan could help reduce your monthly credit commitments. Pay off whatever is costing you the most first, and look into options like switching your credit card to enjoy benefits like 0% on a balance transfer.
3. Seek advice
One of the best things to do when you’re struggling to keep up with bills, or you’re at risk of falling behind with payments, is to seek advice. There are people out there who have the expertise and the experience to advise you how to move forward, and which steps to take to get back on track. It’s easy to assume that there’s no way out if you haven’t physically got the money to pay off debts, but there are solutions out there. The sooner you reach out, the better. A financial adviser can talk you through your options, and provide you with information based on your individual situation. Many people shoulder the burden of money worries alone, and they feel uncomfortable talking about these issues with others. Speaking to an adviser can help to ease anxiety and stress, give you a much clearer picture of your situation, and hopefully, make you feel more confident about the future.
4. Start budgeting
The main reason we get into debt is spending too much money. In this day and age, when credit is readily available, and it takes seconds to complete a purchase, it’s very easy to live beyond your means. If you find that you don’t really pay attention to how much you spend, budgeting is an excellent idea. If you have a budget, this will help you regulate spending, and prevent you from getting into more debt. To make a budget, all you need to do is write down how much money is coming into your account, and list the payments you expect to make in the coming months. Note down regular expenses, such as energy bills and rent and mortgage payments, and add any one-off costs for that specific month. You can then work out how much disposable income you have available, and give yourself a daily or weekly budget to stick to.
5. Reduce spending
When you’re struggling with debt, you don’t want to make the situation worse, so try and reduce spending and decrease your monthly outgoings. Cut out luxury items until your financial situation looks healthier, and take steps to save on household costs. Write a list before you go food shopping or do your shop online to enable you to keep an eye on the running total. Use the Internet to compare prices on energy suppliers and insurance policies, and lower the cost of commuting by sharing lifts or buying a monthly pass, rather than individual bus or train tickets. Even small savings can add up over a period of time.
Are you struggling to cope with debt? If you owe money, or you’re finding it tough to get by, there are steps you can take to try and tackle debt and improve your financial situation. Be honest about the scenario in which you find yourself, don’t be afraid to ask for help and start paying more attention to how much money you spend. Hopefully, these tips will help to ease anxiety and get you back on the right track.