If you’re finding your debts a bit of a nuisance, and would like to improve your debt management skills to help you get rid of them faster – or in a less-stressful manner, take a look at the following useful tips:
Create a budget
By creating a budget, you can get a better idea of what is going on with your finances. It should also allow you to see if you are wasting money you could be using to repay more of your debt.
To create a simple budget, just write down everything you earn in a month, then everything you spend in a month (on your essential costs – such as mortgage/rent, utility bills, food, etc.). Now simply subtract the money you spend from the money you earn. This will leave you with a figure known as your ‘disposable income’.
Your disposable income is basically the money you have available to spend on whatever you want each month, as well as making payments towards your non-priority debts (like credit cards, overdrafts and unsecured loans). You may want to put some of this towards making ‘overpayments’ – paying more towards those debts than you have to – which should help you clear your debt at a faster rate.
Keep track of all your spending
Now you have your budget in place, it may be a good idea to keep track of your spending. In other words, whenever you spend money (even if it’s just £1), write it down – and also write down what you bought.
At the end of the month, take a look at the list you have created and look at what you could have done without. For example, did you buy your lunch at work every day… when you could have made it at home and taken it in? Or did you buy a takeaway one night, when again, you could have just made your tea at home?
Spending money on things you don’t actually need can really eat away at your disposable income, so you should try and cut back on your non-essential spending to free up money you could use to repay more of your debt.