7 ways to finally tackle your finances in 2018
January 15, 2018
The start of a new year is the perfect time to take stock of your finances and put plans in place for a financially savvy year ahead. While you may feel your problems are insurmountable, there are always things you can do to help, most of them surprisingly easy. Here are 7 ways you can get a firm grip of your finances in 2018:
- Know where you stand – In order to tackle your finances, you need to know exactly where you stand with your money. This means knowing exactly how much money you have coming in and going out on a monthly basis, as well as details of all the debt you currently have. This means jotting down the name of each provider, how much you owe them, the interest rate you are being charged, and how long the agreement has left to run (in the case of loans or finance plans). As they say, knowledge is power, and it is only by being armed with this knowledge that you can devise a suitable solution for your issues.
- Negotiate your interest rates – When trying to clear debts, some people find themselves struggling to chip away at the balance due to the level of interest being charged. The highest rates of interest are typically attached to credit cards and payday loans. If your current provider is not willing to lower the interest rate you are being charged, you may wish to look at moving your debt elsewhere to save you money; this is known as a balance transfer. However, being able to do this depends on your credit rating and the level of debt you currently have outstanding. If you have a poor credit rating you may find that no company is willing to let you transfer your debt over to them.
- Consider snowballing – If you have a range of debts spread out among various loans and credit cards, you may wish to consider the snowball method. This involves paying off your debts in a certain order to minimise the interest you pay and also cut down the time it takes you to clear your outstanding balances. The most cost effective way of paying down debt is to tackle that which is attracting the highest rate of interest first. Once you have cleared this balance, you should direct the freed-up payment amount to the next debt with the highest interest. While this is typically seen as the best way, some people prefer instead to target the smallest balance first to reduce the amount of loans or credit cards they have quicker. This approach may cost you more in interest; however, the satisfaction of clearing each debt may spur you on to continue.
- Keep a spending diary – It is surprising how much the little things add up. A coffee and a newspaper on the way to work, a supermarket meal deal for lunch, a couple of drinks in the pub at the end of the week etc. It is easy to convince yourself that a few pounds here and there won’t have a significant impact on your overall finances, but keeping a diary where you track every single thing that you purchase can be a real eye-opener. By doing this you will quickly be able to see how much money you are spending on unnecessary items on a daily, weekly, monthly, and even yearly basis, which may give you the shock you need to change your spending habits.
- Give yourself a budget – and stick to it! – Budgeting is crucial for getting a firm grip on your finances. Allocate a certain amount to cover your bills, food, and travel; you may also want to allow yourself a small budget for entertainment and treats. It is all well and good giving yourself a budget for the month, but it is only going to help you if you stick to it! Give yourself a realistic budget and be strict with yourself. When things get tough consider why you are doing this and have the end goal of being debt-free in your mind.
- Increase your income – If you have done all you can to limit your outgoings and are still coming up short, your next plan of action should be to increase the money you have coming in. This may involve taking on additional hours at work, or searching for a second job that you could do outside your current working hours. If this is not possible, there are plenty of other things you can do to bring a few extra pounds in during the month – survey sites, cashback websites, or selling your unwanted items online can all bring in additional income which you can put towards clearing your debts quicker.
- Seek expert advice – If you have tried all of these steps and are still not making any head way with clearing your debts, you should seek expert help as a matter of urgency. For over 25 years Scotland Debt Solutions have been helping Scots take control of their finances and look towards a debt-free future. To find out how we could help you contact your local office today.
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