Start on the path to freedom!

“More than 6 million Britons don’t believe they will ever be debt free, according to new research which has also found the average person in the UK owes £8,000 – on top of any mortgage debt” we read in the Guardian.

Debt is very scary. It is a heavy burden to carry and most of us don’t know how to confront it until things get nasty. So here are our top tips to start tackling your debts and allow you to start a brighter future and work towards your goals.

First things first, not all debt is a bad debt. It is important to differentiate between good debt and not so good debt. Good debt is money you borrow for things that increase in value over time (think student loans or a mortgage). Bad debt is money you borrow for things that lose value with time (impulse shopping on a credit card; Paydayloans; cars).

1. Commit to not taking any additional debt. That sounds obvious but it’s time to stop using this credit card. Freeze it / cut it up;

2. Write it down: take a pen and paper and write down everything you owe. Make a list of all your debt on one sheet:

• How much do you owe?

• What’s the interest rate?

• How much are you paying monthly / yearly?

3. Check all your expenses. What can you cut to live on the bare minimum? That will allow you to release some cash to start repaying some of your balances;

4. Order your debts and start repaying either:

• The minimum amounts, or

• The debts with the higher interest rates;

5. Make a budget, identifying what you want vs. what you need;

6. Get organised: think calendar alerts and automatic bill payments.

These are great places where you can get some help:

• Citizens advice

• National debtline

And for further reading…

Photo by James Pond on Unsplash.