Being in debt is awful. I do know, considering I’ve spent a lot of my adult life in debt. Not all of it has been mine, as my husband and I pooled our income and outgoings, but that doesn’t mean there isn’t an awful burden.
Trying to get out of debt isn’t easy. And staying out of it is even harder. But it’s not impossible. Right now we are on a good path of getting out of debt completely and apart from a mortgage later in life (which I consider a good debt to be in) we will stay that way.
Here are the four steps we’ve taken to make sure we can get out and stay out of debt. You can use them to get yourself out of debt.
Note: we opted for loan consolidation to give us a head start this final time. The first time I got out of debt I didn’t use it to help.
Take It One Loan at a Time
Doing it without loan consolidation does work. You need to take one debt at a time, and be really strict with your spending.
Focus as much as you can each month on one debt, and then pay the minimums on all your others. We chose the credit card that had the most to clear, which just so happened to have one of the highest interest rates. It was costing us the most in minimum repayments and interest, so it was the best one for us.
With the first one cleared, you can move onto the next debt and then so on.
Now that we’ve gone for the loan consolidation, we only have the one repayment. This has made more sense for us in our current financial situation.
Still Put Some Money Into Savings
While I always say you should put most of your money on debts, you still need a savings fund. In most cases, the
whole reason you’re in debt is because you haven’t had savings to fall back on when there is an emergency.
Our savings fund meant that we were able to afford car repairs and a new car in the end without ending up in a lot more debt. Now it means we’re able to relocate without putting anything on a credit card (that is just there for serious emergencies only).
You’ll be surprised at how a little bit of money into a savings account will add up. I’ve actually started putting all the estimated disposable income into a savings account as soon as we’re paid. I can then move money back into the current account if I find I’ve over estimate. With the money in the savings account, we’re less likely to spend on frivolous stuff.
Set a Budget and Stick to It
Your financial budget will become your best friend. Set something that is realistic, but gives you enough money to clear your debts and put some into savings. Now stick to this budget.
As you clear your debts, you’ll find you have more disposable income. I like to put the money I’ve saved through loan consolidation straight into the savings account just so it isn’t spent. We can then make a decision if we want to spend it later.
It took us some time to get used to sticking to a budget. In fact, this was why we ended up back in debt! Now that we’ve learned that lesson, we have started really sticking to a budget and enjoying the debts going down and the savings going up.
Decide If It Is Really Worth It
When it comes to spending, decide if it is really worth it. Of course, your rent/mortgage, bills and food are essential but those extra luxuries could end up putting you out of pocket. Is it really worth the debt you end up accumulating?
I’ve become a lot more frugal with my money. I’ll look for ways to make a saving and turn down takeaways just because they’ll be easier. Easier doesn’t mean worth it in money. I like that extra £20 in my bank, thank you!
You do need to be honest, though. For me, spending a little extra on my children is more than worth it when I see their faces (well, the older girl’s face) light up. Spending money on myself just isn’t worth it for me, but then I’m used to spending little on myself now.
Isn’t it time that you got yourself out of debt? Start looking at ways that you can make savings and create the budget to stick to. Start working hard to clear your debts and create a savings pot to stop yourself from getting in this position ever again.
I'm Alexandria Ingham, and am a work at home mommy and full-time freelance writer. Writing has always been a passion from a young age, but it was only in 2009 that I decided to use it to make money online. Since then, I've managed to make a career out of it and don't regret it.