Debt is a word that will generally make you run for the hills. With debt comes worry, stress, and pressure to pay everything off soon as possible. This can seem like an impossible task, but there are ways around it. If you just left university and have a mountain of student loans to pay off, or you are thinking about improving your credit score. Or you may be saving for a big life event like a wedding or buying a house. There are ways to help reduce your debt and make sure you squeeze the life out of every penny. It can take some planning and skill, but you can do it! Here is how you can save money and still retain your lifestyle in a few simple steps.
Firstly you need to make a list of everything that you spend money on. For example, bills, the kids, everything! Then you need to write down how much each thing costs monthly. If you are not sure, you need to overestimate rather than underestimate. Add up everything and then subtract that from your monthly, take-home pay. That way you have an idea of what you need to cut down on in comparison to what you earn. After that, categorize your debts from the lowest to the highest and prioritize accordingly.
Get Rid Of Non-Essentials
Do you use your gym membership? I didn’t think so. Getting rid of things that are not essential is the next step to reducing debt while retaining your lifestyle. Calling all your utility providers and asking for discounts e.g., car insurance or your mobile phone is another helpful way to free up cash as they will always strive to keep you as a customer! If you are stuck for ideas on how to free up money, look online at websites like The Fortunate Investor.
Paying Off Debt
The trick to paying off your debts is to pay the minimum amount required on all of your debts except for the one debt you are trying to pay off. This should be the debts with the lowest amount you need to pay. Doing this is a good way to pay everything off in baby steps. If you have been able to pay your lowest amount owed, this will motivate you to continue paying off all your debt.
Make The Payments Automated
To reduce the amount of work when he comes to tallying up your debts each month, the best way is to automate the payments. Make sure that with each that you move onto, that you reset your automation. Automating your payments is the best way to keep you disciplined.
After you’ve paid off the first day, use all the money that you used each month to pay off that debt and transfer it towards the next step up on the list. Again make sure that this payment is automated. After that debt is paid off transfer the money you were paying to the third debt. Continue this cycle until all your debt is paid off!