3 Ways to Clear Your Debt This Year

Unrestrained shopping can, of course, leave you with sizable debt. But even without falling victim to the lure of retail buys and other spending temptations, excessive debt can still become a problem. The good news for families starting the year in the hole: changing a few habits can turn things around. If your finances need a lift, use these tips to help clear personal debt this year.

Changes Bring Savings

Are you stuck in a negative cash flow pattern, leaving you with too much long-term debt? If so, changing a few of your financial habits may be all that’s needed to rein-in spending and find a sustainable budget.

#1 – Make Spending Count

Household spending demands are not going away, so balancing your outgoings is the best way to stay on track. Squeezing maximum value from your personal spending is easily accomplished, keeping a few basic principles in mind. For results you’ll feel right away, start focusing on the most accessible savings opportunities within your budget.

One simple way to make spending count is shopping around for the best price. Without letting it become an unhealthy obsession; do your consumer research before making purchases, particularly when you’re spending sizable sums on individual items. When your car, household appliances, boiler, or other expensive items need replacement, shopping for deals can save you hundreds of pounds. And when it’s time to contract services, getting multiple quotes ensures you don’t overspend on house improvements, car repairs, and other services for hire.

Shopping for the best price at the supermarket is another way to save money, but paying too much might not be the biggest drain on your family food budget. It could actually be food waste that’s taking a big bite out of your cash flow. If you’re serious about cutting costs and drawing down your outstanding credit balances, tightening your food budget can help get you there in a hurry. Start by shopping to a list at the market, ensuring you don’t stray from your meal planning. And when there’s food left over after meals, repurposing it for other dishes keeps it out of the rubbish bin and makes your food spending count.

#2 – Make the Most of Borrowing Opportunities

Carrying a manageable credit balance is not a problem, until your income isn’t enough to keep up with repayment. To avoid slipping into an unsustainable flow, it’s important to borrow wisely when financing is needed.

Whether you’re looking for a short-term loan without a credit check or considering another type of financing, reviewing providers online can help you find the best match for your funding needs. As you weigh the pros and cons of each credit opportunity, it’s important to account for the true cost of repayment. In most cases, credit cards represent one of the most expensive ways to cover costs. A personal loan or financing designed to consolidate debt may present more cost-effective alternatives, particularly compared to credit card balances that are rolled over month-after-month.

#3 – Account for Your Income and Outgoings

Balancing income and outgoings is a straightforward concept, but unfortunately; family finances frequently fall short of this fundamental goal. If your household finances have lost equilibrium, crafting an accurate budget is the easiest way to get back on track. Start with a thorough reckoning, identifying all the money coming in, and all the money going out. Equipped with an accurate ledger, outlining your spending habits, the next step is identifying areas for improvement.

Are you duplicating communications expenses, paying for too many phones and internet connections? Cutting back to the bare essentials can yield noted savings, without sacrificing the services you need. Has your entertainment spending gotten out of hand? If you go out a lot, making fewer trips to the pub with friends is a good first-step, saving cash and clearing debt. But you don’t even need to leave the house to overspend; your TV service could be dragging you down. Without giving up the programming you enjoy, changing your TV deal can help lower monthly outgoings. For results you’ll appreciate immediately, apply the same type of review to all of your budget categories, carving-out savings at every opportunity.

Spending less is a critical step toward reducing your overall debt. With less money going out the door, it is possible to redirect your earnings toward credit payments, resulting in a more balanced financial equation at home. For the best results, get a handle on spending and borrowing, creating a sustainable budget to carry you forward.

Paul graduated in 2001 with a degree in Finance. Since then he has gone on to work for several of the UK's most well-known financial institutions.

An avid blogger and a huge football fan, Paul is here to guide you through the ins and outs of personal finance and perhaps save you some money in the process!

Leave a Comment

Your email address will not be published. Required fields are marked *