What a world it would be if you could wave a magic wand and say goodbye to your debt forever.
Sadly, we don’t live in that world, and we need to find more pragmatic solutions for handling our debts.
If you are currently in debt and are struggling to stay afloat and make ends meet, you’ll need to get a strategy in place to reduce your debt.
Here are six ways that you can reduce your debt while improving your financial health.
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Table of Contents
Get To Grips With How Much You Owe
For many people, when they are in debt, it can become very easy to bury your head in the sand and try and ignore it. The problem with doing this is that your debt does not go away. In fact, you lose track of how much you owe when you ignore bank statements and essential letters.
Stop and take stock. Find out how much you owe and start creating a plan about how you can pay this back.
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Overhaul Your Spending
Next up, you’ll need to start thinking about reviewing your spending. You might not want to face up to the fact that you’re overspending; however, it is essential to take this step.
Go through your bank accounts and see where you have been spending your money each month. Compare your outgoings with your income and then start to create a strict budget based on what you actually have coming in.
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Cancel Unused Services
Did you join the gym in January and never actually go? If you’re paying for services such as gym memberships or for subscriptions that you barely even use, then it is time to start cancelling everything and freeing up that cash.
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Get Outside Help
Getting out of debt is not easy. Don’t try and go it alone. If you’re struggling, speak with a debt charity, or even with your lenders.
If your current debt situation seems hopeless, the last resort might be to make a consumer proposal. The consumer proposal definition is that you make an agreement with your lender around repaying your debt in a more manageable manner.
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Consolidate Your Debt
Bringing all of your debts into one loan is a great way to make your financial burden more manageable.
A consolidation loan allows you to move all of your debt into one loan. That way, there will be no juggling payments, or lending from Peter to pay Paul, and you’ll have a final end date by which time you’ll be free of debt.
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Turn Your Back On Your Old Spending Habits
Once you have paid off your credit card, cut it up, and cancel it. If you don’t have one, you won’t be tempted to use it.
Review the way that you spend and try and be less impulsive when making purchases.
Don’t Look Back
Once you’ve repaid your debt, don’t forget to keep your old habits from creeping back in. Be mindful of your spending, and avoid taking out new lines of credit.