4 Practical steps to be debt-free
Financial freedom is a goal that we should all strive for. To achieve a debt-free life, you need to have discipline, patience and a clear plan. Depending on how much debt you owe, becoming debt-free may take a while, but it’s not unattainable, and the reward is worth it.
Here are 4 tried and tested steps to follow to get started on reducing your debt:
Step 1: Calculate what you owe. To get out of debt, you need to know exactly how much of it you’re in. Make a list of all your loans, outstanding credit card amount, accounts and other debt you currently have. Also ensure you have the necessary (and up to date) information about the interest rates you are paying on each one and what the outstanding amounts are. Create a spreadsheet outlining it all to make it easier to track your progress.
Step 2: Re-evaluate your current budget. Make a list of your monthly expenses and calculate how much you typically have left over after you’ve paid your bills. Now ask yourself: are there areas where you can cut down which can unlock money to help settle other debts? Use the Money Movements add-on on your Banking App to see exactly how much you spend per category per month so you can track your spending habits and see where you can make adjustments and improvements.
Step 3: Where possible, pay more than the minimum amount. Once you’ve looked at your budget and seen where the opportunities are to cut down and free some cash, try targeting certain debts by putting extra money into each payment so you can settle that debt sooner and free up more cash to tackle the next one. It’ll also save you money on interest because you’re cutting down the period of repayment and (possible) incurred charges.
Step 4: Don’t apply for more credit. Paying off outstanding balances can give you a sense of achievement, and you may say to yourself, “Now that I’ve paid it all off, I know I will be able to do it again,” but try to resist the temptation of getting yourself back into a cycle of debt. Instead, try living within your means, enjoying the freedom of no debt and getting into the habit of making smarter financial decisions that will benefit you in the long run.
If you’re struggling to manage your repayments or in danger of your accounts going into arrears, we can help ease the stress. Contact us about debt care today.
Next step
Download our Banking App to access the Money Movements feature plus get updates on your Credit Score.
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