Tuesday, April 2, 2024

How can I get rid of debt?

Being in debt may not only affect your finances, but it can also create a lot of mental turmoil, especially if you are uncertain about how you can clear your balance and still stay afloat in the coming months. Finding ways to nullify debt as quickly as possible and prevent it from occurring again, can help you to find a bit more financial freedom. This may be especially useful to those who struggle with managing their finances, or are on a lower income than they may like.

One of the important aspects of learning to be free of debt can be to put measures in place to reduce the likelihood of you needing to borrow money again. While avoiding impulsive purchases can be helpful, you might also want to think about how you can provide for your family, especially if large costs arise that are necessary to your daily life.

Car repairs, especially to expensive cars like Audis or a problem with your home, can quickly lead to a large bill. Setting up an ISA with Wealthify can allow you to save small amounts of money each month, which can then grow thanks to the interest provided. The money you save may also be free from any tax, which can enable you to keep all of the profits. An ISA may come with a maximum yearly limit, so you might want to check how much is in the account before you attempt to deposit more. Getting into a habit of saving money may come in handy should expenses arise.

When paying off existing debt, you may want to consider the method you are using. Trying to pay off a larger debt first may actually work against you, as you will still be gaining interest, alongside your other debts. Many people find the snowball method to be a bit more successful. This involves making the required minimum payment on all debts that you currently have, and then putting as much money as possible onto smaller ones. That way, you can completely erase your lower debts a lot quicker, and then focus on the others.

You may also want to look into the ways you manage any credit card debt. When a promotional period ends, you could then see fees and interest added to your existing balance. Due to this, you may want to consider transferring your balance to a new card that has 0% interest. It can be helpful to consider doing this until your balance is at 0, and then simply cancel the card entirely so that you aren’t tempted to use it again. This way, you can then live within your means and reduce the temptation of borrowing money that you don’t have.

Getting into debt can be quite a vicious circle. You may borrow money one month, but then find yourself continuing to borrow when you don’t have enough money due to paying off your previous loans. Finding ways to neutralise them completely, and then live only on the money you physically have in your bank, can help to free you from this spiral.

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