Most people have gotten into debt by getting themselves into a cycle which never seems to end. The first step is spending more money than you earn. Once you start doing this, you’re going to create a deficit which is never going to be good for your bank account. You’ll then need to borrow money in order to fill in the gaps. Your next pay check will mainly be spent on paying back the debts. If you then continue this cycle, it will never stop, and the more debt you owe, the more difficult it is to pay it back.
- Start by doing a budget
By planning a budget, you’ll be able to set out everything in front of you and you won’t just carry on guessing at how much you’re earning and how much you’re spending. However, your budget needs to be realistic if it’s going to work properly. Don’t budget £30 a week for a family of four when you have been spending £120 per week in the past. The more realistic your budget is, the more chance it will work. Cut back on things that you know you will be able to cut back on, and leave yourself some room for having fun, such as dining out or going to the cinema once a month.
- Look for financial help
Look for financial help if the form of money that you won’t have to pay back. For example, you might be able to claim benefits if you’re earning under a certain amount. Single mothers, people working 16 hours a week and those on low wages can all claim benefits in various forms. While you might not want to look to the state for some help, it could help you out when it comes to your money matters.
- Use savings to pay your debts
It’s definitely a good idea to use any savings to pay your debts. While this might mean that you don’t have as much emergency money as you’d like, it’s a much better idea in the long term. If you have a lot of debt and you don’t pay it off straight away, you’ll start to amass lots of interest over the coming months and even years. By using savings to pay off your debts, you will ensure that you avoid paying all that interest, and in the future, you’ll be able to save more rather than use your wages to pay off debts.