Top Tips for Clearing Debt
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Top Tips for Clearing Debt: 5 ways to reduce your debt and save money
Consolidating your debts in order to reduce your expenditure makes perfect sense, but doing so fully informed about the ramifications ensures that any decisions are made from a position of knowledge rather than desperation.
Take some advice
Debt management companies often charge for helping you to control and reduce your debt, which seems counter-intuitive when attempting to reduce your expenditure. By using a free advisory service you can be sure that the options suggested will offer you a cost-free and objective overview of your circumstances, allowing you to make sensible decisions about budgeting and expenditure.
Document your debt
Make sure you list every debt, every monthly payment and all expenditures. Without a full picture of your incomings and outgoings, there is no way to effectively consider how to reduce your debt or manage your finances. Even something as small as setting up a regular, cannot-live-without-it magazine subscription (which often comes with a direct debit discount), as opposed to buying it in the newsagents, can make a considerable difference to an annual budget. If you take one month to collect all receipts, document all small purchases, and list every incidental cost you can form a full picture of your normal expenditure; you will now be perfectly placed to make decisions about where you can cut spending without feeling too much of a personal pinch.
Do a little research
Google is your friend in matters of debt control. Rather than continuing to struggle to make your monthly payments or sticking with a lender that charges debt-increasing interest, consider moving your balances. There are credit cards available that offer fixed-term, zero-interest deals that will help you to reduce the monthly accrual. Although you may have to pay a transfer fee based on your balance, this is a one-off charge that will not be compounded on a monthly basis, allowing you to reduce or at least maintain your balance and payments. Not only that, but insurance and utilities companies offer competitive rates to new customers; compare their charges or coverage, and consider changing providers to save on your annual bills.
Keep it to cash
When you’ve sorted out your direct debits and standing orders, and calculated a weekly or monthly budget of other expenditures, you will have a figure left for incidentals. Rather than running the risk of impulse purchases or breaking your budget with plastic, keep this ‘pocket money’ as cash and clear your wallet or purse of cards. By being able to physically see what you have left at any given time, and by restricting access to credit, there will be less chance of overspending by mistake. Debt management articles always talk about off-setting one must-have purchase with another can-be-done-without treat; by only carrying enough money to pay for one or the other, you will be more easily able to keep to your set spending limits.
Keep your eye on the prize
By regimenting all purchases and payments you will be much more easily able to manage and reduce your debt. Although you should always ensure that there is a little money available for emergencies, it is vital that your ultimate aim remains the reduction of your debt. By shopping for groceries in supermarkets that offer good rewards systems, by planning all spending in advance, and by accepting that treats will have to be rare rather than regular, you will be better placed to cover your bills and ease your financial obligations.
In short, debt reduction and effective financial management should be a long-term goal with a well thought-out and well-informed plan.
There are lot of websites online which offer free debt advice. For example this site has lots of information of clearing debt and debt advice
Sharon is a keen blogger who enjoys writing about money saving subjects.