Paying off debt can be an exhausting task, especially when interest and charges are being added by the lender. You may feel as though you’re on a treadmill of bills and payments, but there are steps you can take to become debt-free in 2021.
Understanding where your money is going and how much you have coming in is the first step. Budgeting isn’t the most exciting of activities, but it will be of significant help in ridding yourself of debt for the long-term.
Budgeting is just the start, however, so let’s look at this in more detail, as well as other tried-and-trusted ways of paying off debt and regaining much-needed financial stability.
If you don’t know the full extent of your debts or how much money is coming in, it’ll be impossible to control of your finances. Making a budget helps you keep track of spending, and you can do this using pen and paper or a budgeting app on your smartphone.
You’ll need to establish how much money you’re earning, and calculate your total expenses including annual costs such as birthdays, holidays and Christmas. This provides an accurate picture of your financial situation, and can guide your next actions in becoming debt-free.
Examine your bank statement for outgoings that could be cancelled – subscriptions that you no longer need or use, for example, and cut the remaining costs wherever you can. Comparison websites can help you find cheaper options for utilities, insurances, and other everyday expenses that you can’t cancel, and streamline your outgoings to release cash.
The low interest rates on savings means it’s preferable to make additional debt repayments when you can, rather than saving the money. Even small amounts can add up and considerably cut the amount of interest you have to pay over time, so you become debt-free sooner.
One way to make sure you pay household bills on time and avoid late payment penalties is to automate, so you don’t even need to think about it. Paying household bills, utilities, and credit card debts by direct debit protects you from further financial difficulty, and keeps you on track with your budget.
If you’re eligible to transfer your credit card balance(s) to a 0% balance transfer card, it’ll save you a considerable amount in interest. Be aware that a transfer fee will apply so you need to make sure it’s financially worthwhile to make the change, but you may be able to secure a credit card with no interest for up to 18 months or more. As long as you don’t add to the debt during this period, and make payments without fail, you can gain control of your credit card debts relatively quickly.
There are various official debt remedies available in Scotland, including the government-backed Debt Arrangement Scheme (DAS). A formal procedure such as this, or a Scottish Trust Deed, can help you become debt-free over time, as well as protecting you from bankruptcy by a creditor.
If your debts have become unmanageable, you need to take action quickly by seeking help from an insolvency professional. Scotland Debt Solutions has been helping Scottish residents to escape debt since 1989, and can offer you reliable practical advice.
Please contact one of our expert team to arrange a free, same-day consultation. We operate offices around Scotland, and can provide more pointers on how to become debt-free in 2021.
The 70-20-10 method of budgeting allocates proportions of your income to three different areas – living costs, debt, and savings. The sheer simplicity of the budget helps you control spending, repay...
If you have money left over at the end of the month, you may be wondering how best to use it. Should you pay off your debts, or is saving a better option? You might even be considering both.
Our Scottish based team can help advise you on your debt problems.