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How to reduce debts quicker

Most of us will experience debt as some point in our lives – so what’s the best way to get on the path to financial freedom?

Debt affects more people than we might imagine. According to research by the Money Advice Service*1 published in March 2016, one in six adults living in the UK have financial worries. That’s around 8.2 million people, or 16.1% of the population. However you look at it, that’s a whole heap of debt.

Even though you may have your debts completely under control, wouldn’t it be nice to keep it that way – and possibly even pay your debts off quicker than you had planned? These tips may help achieve just that…

1 Stop creating new debt 

If you’ve any hope of getting out of debt you need to change your financial habits – and fast. The simple truth is that new stuff won’t make you happy, for that you need to be debt-free. Stop new debt by thinking twice before every purchase.

2 Less isn’t more; more is more

Repaying the minimum on a credit card is not enough. According to a July 2016 article by Money Saving Expert*2, if you borrow £3,000 aged 21 and only repay the minimum amount each month, you’ll be 50 before you’ve cleared it. You don’t need to make a huge monthly repayment to make a difference. Paying an extra £10 a month on a £1,000 credit card debt charging 16% interest would reduce your repayment time to just over five years. A little bit can go a long way.

3 Become a balance transfer whiz

How much interest are you paying on your credit card? Switch to a 0% balance transfer deal and you pay off your debt – not the interest. Shop around: these deals usually run for a set period of time. The trick is to pay off as much of your debt as possible (ideally all of it) before the 0% rate runs out. Having a deadline can help you pay back your debts faster.

4 Organise your debts?

Different debts affect your finances in different ways. The key here is paying your debts in the right order. Organise your debts by interest rate and pay off as much as you can afford each month of the debt with the highest interest rate (while paying the minimum on all other debts). Dealing with debt in a structured way can help speed up the process.

5 A friend in need…

Nobody should have to manage debt alone. If you do ever find yourself worrying about debt, swallow your pride and speak to other people about it. Not only will this help you identify your options and take action sooner, it’ll also make you realise you’re not alone. If want further advice about how you can reduce your debt more quickly, get in touch with the Citizens Advice Bureau*, the Step Change Debt Charity*, or the National Debtline*.

* We are not responsible for the content of other websites.

Sources:

1 https://www.moneyadviceservice.org.uk/en/corporate/one-in-six-adults-struggling-with-debt-worries
2 http://www.moneysavingexpert.com/credit-cards/minimum-repayments-credit-card

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