How To Become Debt Free
Tips And Ideas To Getting Out Of Debt
The first step to being debt free is to clear your most expensive debts and the most urgent ones. Any debts that could incur additional charges or penalties need to be paid. After that focus on debts with the highest rate of interest. For example, if you have a number of credit cards pay off the one with the highest rate of interest first and then work your way through the rest of them in order of the level of interest charges on each one. If you have store cards, stop using them. The interest on these is significantly higher than most credit cards and will outstrip any benefits of using them. Take advantage of 0% interest offers on credit cards to clear the more expensive ones, but remember to clear the balance before the offer expires.
Use savings from poor interest rate accounts. If you have money in savings accounts earning pitiful amounts of interest, use that money towards paying off debts. Most money borrowed will be incurring higher rates of interest than can be made from savings. Just make sure you have enough savings for emergencies. Ideally, experts suggest having enough put aside to last between three to six months.
Save money on utilities. Use comparison websites to find cheaper utilities, insurances etc. There is no reason to pay more than you need to for the same service. Yes, they can be a pain to do, but an hour or so of your time is worthwhile for the savings that can be made.
Sell stuff. Most of us have items packed away that we never use. Turn it into money. If you don’t need it sell it on eBay, local newspapers or do a garage sell or boot fair. Just make sure the money you make goes towards clearing the debts.
Consider downsizing. Could you live in a smaller home or get by with a cheaper car that would release capital that can be put towards clearing your debts?
Rent out a room. If you have a spare room in the house, consider renting it out. Not only will it bring in an extra income, your lodger can also help contribute towards the bills and maybe even be a handy baby sitter.
Change spending habits. Look at your lifestyle habits and question if changes can be made to how you live that can generate savings.
Stay-cation. Ditch the expensive overseas holidays and take a holiday at home instead. Take day trips from home, pack your own food and explore your local area. If you want to spend nights away, try cheap alternatives such as camping, or using budget chain hotels. Alternatively, do a house swap, using one of the many online companies that now exist.
Cash free Christmas. Christmas can be an incredibly expensive holiday period, but spending money is not the only way to enjoy this festive time. Have a Christmas where you spend little more than you would at any other time of the year. Let relatives and friends know far in advance that this year you will not being giving presents or expecting them. Instead, suggest meeting up and all pitching in with a Christmas meal, to keep costs down. Re-discover the joys of just spending time with each other and make Christmas about enjoying each others company not about spending.
Make changes at work. If you haven’t received one recently, ask for a raise, or enquire into doing overtime. If extra work or an increase in salary isn’t available, look at getting a second job. Consider staying in this job until the debts are cleared and then celebrate being debt free by handing in your notice. Or consider a career change. Is there a job you could do that pays more?
Use free help. Seek help and advice from government departments and charities. There is a lot of help out there that is free and will be able to give impartial and professional advice on your particular circumstances.