Just because you are going to be shifting your debt doesn’t mean that you cannot spend. It simply means that you have to become more mindful of your money and spend wisely. You can no longer head out to Michelin starred restaurants for dinner and you will have to make do with the chain restaurant instead. By learning the value of money in your quest to become debt free, the chances are that you won’t rely on credit cards ever again. If you want to be back in the black, follow this guide to go from debt ridden to debt free.
Credit Cards
The most high interest debt you will have will be your credit cards. If they are maxed out and you are struggling to pay off the bare minimum each month, you probably aren’t even paying back any capital every month. You will be paying off a fraction of the interest alone. To combat this, you need to seek new credit cards. These aren’t to add to your debt, but to transfer your present credit card debt onto. Do your research and look into credit cards that offer zero per cent interest on a balance transfer. Any debt your transfer onto them will not accrue any interest. This means every cent you pay off each month will be going towards paying off the capital debt your owe. This can shave off months of debt repayments meaning that you can pay clear your cards quicker.
If your credit cards, store cards, and other loans are becoming unmanageable, you need to think about consolidating. This means applying for an unsecured personal loan. Doing this means that only one single monthly repayment comes out of your account every month rather than several. This can help you to budget more effectively and can help you pay back your debt in a speedier timeframe.
Budget
The most important aspect of becoming debt free is your ability to budget. This life skill will help you to, not only shift your debt, but also to save. You can do both at the same time. By budgeting and using a personal budget template, you can list all of your incomings and expenditure. Your expenditure every month should never exceed your wages and other income. Use a salary calculator to work out your take home pay after tax at the end of every month and allocate a proportion to savings straight away. Even just twenty dollars will soon build up to create a pleasant little nest egg should a sudden financial outlay occur. Life can send you many monetary curveballs such as the car breaking down, the boiler breaking, or your kids needing new school uniforms. While you may have relied on credit cards before, to be debt free, you need a savings account to fall back on.
Budgeting means shaving off any unnecessary expenditure. Do you really need to pick up the extra large caramel latte on the way to work every day? This is a needless expense that you can cut. At the same time, you will need to factor in money for leisure pursuits. Try and hunt for the cheapest options. When heading to the movies, go midweek when tickets are cheaper. If you love eating out, there are plenty of chain restaurants that allow you to take advantage of two for one meals which you can then enjoy with a pal. You may need to be more fugal going out once a month instead of once a week, but these can act as little rewards for your thrifty nature.
Downsize
If you are thinking about your home loan and you are concerned that the burden of the monthly repayments are becoming too much, consider downsizing. This doesn’t have to be a permanent move but it can be useful to give you some financial breathing space. Selling up and moving to a smaller property will allow you to release the equity within your current pad. This can top up your savings and even give you the opportunity to shift some debt. Smaller properties are also cheaper to run, the mortgage will be cheaper, and you won’t have to worry about heating up so much living space.
To make your home energy efficient, consider installing solar panels. While they cost a fair bit to install, they will pay for themselves within three years because you can save so much on utilities. Generating electricity by harnessing the power of the sun means you can function off grid. Any electricity that you generate that isn’t used can be stored or sold back to the utility company. This can help you to make money and cuts your electricity bills to virtually zero.
Consider adding insulation to your roof spaces, replace the glazing in your windows, and ensure that you have a smart thermostat in the home. All of these measures will help you to keep the monthly household bills as cheap as possible.
When budgeting for groceries, try and bulk buy those items you no will never go to waste. Toilet rolls, detergent, and dishwasher tablets are all cheaper to buy in bulk. Opt for frozen veggies instead of fresh and always look out for those buy one get one free offers. If you don’t know how to cook, it’s time to learn. Cooking from fresh isn’t just healthier but it can be cheaper too. Just a few ingredients will allow you to rustle up some great and cost-effective meals for the entire family.
Becoming debt free may be a bit of a marathon rather than a sprint but it will be worth it. Follow this simple guide and you can banish your debt ridden days forever.