What’s the best way to tackle problem debt? The simple answer is that the formula is different for each credit consumer.
- What type of debts are outstanding?
- How much do you owe?
- How much do you make?
- What are your top financial priorities?
- Do you own a house?
Answering questions such as these can help you work out the particulars, focusing your attention on debt reduction. And you can also embrace universal strategies for reducing debt – time-tested, out-of-the-box tactics for chiseling down debt until you’re free of cumbersome finance fees and weighty interest payments.
Break the Cycle
Managing your finances can be a challenge, but effective money management boils-down to a few simple principles. One of the most important tenets of success is balancing what you spend with your personal earnings. Any other outcome undermines your long term financial health, so spending less than you earn is a top priority. If you’re occasionally short between paydays, various UK lenders are prepared to offer short-term finance solutions, to get back on track. Consistent spending discipline will keep you finances in order – beginning with a look at impulse spending.
When household finances turn sour, discretionary purchases are often prime culprits. Despite consumer temptation, one of the best moves you can make toward financial good health is to reduce impulse buys. Try these tips to break the cycle of ill-advised spending:
- Shop Around – Comparing prices can land a better deal, particularly on substantial purchases such as household appliances and other pricey items. It’s easier than ever to compare sellers, many of which will price-match online offers from competitors.
- Cash In – Contactless convenience makes it easier than it once was to complete impulse transactions. As much as we rely on credit cards and contactless options, the payment alternatives make it almost too easy to spend on credit, which can interfere with debt reduction. Rather than reach for plastic, try a “cash only” purchase policy.
- Set Limitations – Online shopping and cashless retail transactions create the impression there’s always cash to draw from the well. The opposite may be true, so it’s important to establish limitations, allowing yourself a set sum each month to spend on discretionary buys.
Slow the Momentum
Debt is a natural feature on the modern financial landscape. It isn’t until outstanding credit obligations eclipse your ability to pay that debt becomes a problem. For many Britons, that day comes when interest totals gain momentum of their own, making it difficult to slow debt growth. It is thought each credit user in the UK pays more than one-thousand pounds in annual interest, but for those in crisis, the totals probably far exceed the national average.
Minimum payments aren’t enough, once your credit card interest reaches a certain level. In order to slow the negative momentum, you’ll first have to start taking bigger monthly bites out of your debt.
Commit to Spending Discipline
Reducing debt is a substantial undertaking, so you shouldn’t expect to conquer cash overnight. As you make small positive strides, revel in incremental success and look forward to your next goal. Working out a spending budget can help you find the discipline needed to make consistent progress in the right direction. The exercise puts your financial habits under scrutiny, finding financial waste and highlighting opportunities to correct bad habits.
Beginning with small savings, money cut from your spending budget goes directly toward debt reduction. The newfound spending efficiency not only frees money to chisel-down debt balances, but you’ll also use less of your available credit by spending responsibly.
UK families are in debt; so reducing outstanding balances is a top priority in many households. Although finding resources to pay-down debt can be challenging, debt reduction leads to fewer interest payments, less worry, and a healthier financial future.