The best ways to become free of debt

30 tips you can use to improve the health of your bank balance

Ways to get out of debt fast here in the UK

There are many people today who tell us how much they would love to pay down their debt or if possible completely eradicate it altogether, however they aren’t quite sure of the best way to do it or where to get started. To be honest, there isn’t really a one size fits all strategy or one particular way to pull this off but here are 9 proven suggestions to get you started. The important thing to remember when reading this article is that the more of these suggestions you can apply to your life and actually act on, the better the outcome will be for you and your situation.

1. Pay More Than is Required

The trick here is to always make sure that you overpay on your repayments of credit cards, overdrafts, personal loans or any lines of credit you may have. If you only make the minimum requirements each month then it will literally take you forever to pay off your balance. If you want to pay off your debt quickly then you must see the importance of paying more than the bare minimum each month. Even overpaying by £25 per month will help. Try using a financial calculator to see how much you can save like this!

2. If you can’t afford it then don’t buy it

Many of us want things that we simply cannot afford to buy. You may have heard the old saying “If you can’t buy it twice then you can’t afford it.”

I’m not speaking for everybody here but haven’t most of us wanted something that we can’t have? I’m not just talking about money and gadgets, we sometimes feel this way about jobs, careers, and matters of the heart too. So for those of us in evil debt, we must get out of the habit or belief that we need to have something simply because we want it. Not even millionaires can afford to buy everything they want. If you want something, don’t buy it unless you have the money. If you can be satisfied with less than you would ideally want, even temporarily, you can use the money you save to pay down your debt.Our parents didn’t let us have all the sweets from the shop every-time we asked so we need be as strict on ourselves as adults as they were with us as children.

Personal discipline regarding our finances is key to getting out of debt and the importance of developing good spending habits is paramount. The good thing about creating healthy financial habits is that when you have paid off your debt then you keep these habits for the future, which prevents those poor habits creeping back into our daily lives.

3. Use cash instead of of credit

Another great way to spend less is to pay with cash rather than credit. McDonald’s has found that people spend 56% more at its restaurants when they pay with credit rather than cash. Studies have shown that people spend 100% more at vending machines or on event tickets when they use credit. Overall, studies seem to show that people tend to spend at least 15% more on everything they purchase things using credit. If you want to get out of debt then you must leave your cards at home and pay with cash until you have paid down your debt to the level you’re working towards. Pay in cash instead of using your card!

4. Pay Off Your Most Expensive Debts First

This may sound contradictory but one of the smartest strategies for getting out of debt is to make the minimum payments on all of your loans except for one, (the most expensive). Choose the one debt that charges you the most interest and focus all of your extra payments on paying that one off first.

Once your most expensive debt is paid off, take that regular payment you were using to pay this expensive debt off and put it towards your second most costly debt. This way you have built up the habit and can maintain this repayment contribution again and again until all of the remaining smaller debts are paid off, leaving the least expensive debt last to pay off. This strategy will allow you to pay off your debts quickly and also become encouraged to carry on as you start to see progress instead of losing the required discipline to keep going until the job is done.

21 top tips & tricks to stop you spending

Anything that can help us to kick the initial impulse of a purchase must be a great thing, as we know it’s far too often the spare of the moment impulse buys that get us into trouble as they compound and usually add up to a hefty month of outgoings. Usually, we don’t even remember what we have spent our hard earned money on but it has simply become a poor habit. I’m sure you’ve heard of the saying “there’s too much month at the end of the money”. Can anyone concur?

Here’s 21 steps and suggestions to kick this urge and help to build better habits at the same time.

1 Sleep on it - If you really want something, sleep on it for a night. You may find it doesn’t seem as attractive the next day! This is hard to do sometimes especially if your hungry or just fancy it in the spare of the moment, but it’s worth waiting to see if you truly desire whatever it is.

2 Work out what it costs in work time - If you’re tempted by an impulse buy, work out how long it would take you to earn that money in hours worked. So if you get paid £5/hour and it costs £150, that’s an extra 36 hours you’ll need to work to fund it, taking into account tax.

3 Focus on your debt/savings - A little trick to help reduce those impulse buys would be to think in terms of savings or debt. For example, if your saving to go on holiday then think “this would cost me one day in the Maldives”…

4 Check if you’re leaking money via unused subs & payments - Many of us have costly recurring subscriptions for gyms, mags, phone contracts, packaged bank accounts and more, yet rarely ever use them — or with time and home moves, forget about them altogether while failing to cancel them.

First things first, either go to the bank or use online banking to check all of your recurring payments and cancel the ones you don’t use or don’t intend to use. Also, don’t get tied into lengthy contracts for example with gyms that pass on the debt to a third party if you fail to pay. The best advice I can give is to have all of your recurring payments under control inside a super useful app. The one I use is, it’s free, easy to use and takes minutes to set up. This means you have total control over your recurring subscriptions and manage everything from your phone.

Then take it up a notch and ask yourself if you REALLY need it. Even if you DO occasionally use that pricey gym/Spotify/Netflix subscription, if you’re overspending right now it may be a luxury you can’t afford. Look for cheap alternatives — see Free Gym Passes, Free Music Streaming and Free Online Movies & Box Sets.

5 Stop spending so much on food — plan, plan, plan - For me, personally impulsive food purchases play a big part in my poor spending habits. If I forget to make myself lunch the night before then I know I will be going to the local bakery or pastry shop and overspend purely because of hunger and want suppress that belly rumbling urge. Heres an awesome site for great healthy lunch box ideas.

So, set a budget, write a food plan (just for the week) and plan meals ahead of time. Steps 6, 7 & 8 are my personal cheat sheets that I use.

6 Never go shopping when you’re hungry! - I’m sure you have all experienced this. Going shopping before you have something to eat is a sure fire way to overspend and buy foods that we never on your shopping to begin with. Have something to eat before you leave the house, this way you will spend far less.

7 Use a calculator - Get your calculator out on your phone and add everything up as you go along, this way you are more conscious about the total amount and won’t get a nasty surprise when you get to the til. Many supermarkets like ‘Waitrose’ allow self bar code scanning with a special device available at the entrance so that customers know the exact amount they are going to spend.

8 Always stick to the outside isles of the supermarket - Ok, not many people know this but the supermarkets are all cleverly designed to make you spend the most money while you’re inside. The way they do it is put the essential items like milk and bread at the far end of the shop which means you will be walking past everything else to tempt you before you get there. Next time you go into any supermarket, you will see what I mean. The trick then is to never go down the isles in the middle of the store (unless you need something in particular) The isles are full of the unhealthier and fatty foods! Stick to the outer ring and you’ll be able to pick up all the essentials, fruit, veg, dairy and bread without the temptation of the unnecessary products that tend to all too often fill our baskets to the brim.

Check out the Supermarket Saving Secrets guide if you need any more info.

9 Leave debit/credit cards at home - Only take out the cash you absolutely need with you and don’t have a cash card with you to take extra out of the hole in the wall. That way, however, tempted you are, you have to walk away in the end. Also, needless to say, never buy things with a credit card as you will always end up buying more than you need and get left with a nice bit of APR to pay.

10 For every new thing, you buy, try to get rid of an old thing - I’m sure not many of us do this but it could pay dividends in the long run. If you really want to go out and buy something new, then try to sell something you no longer use. Buy the new jacket and sell the old one on eBay or Etsy for example. This way you could recoup the cost.

11 Make a list and stick to it - Always make a shopping list before you go to the shops and see tempting goodies. Then once you’re out — don’t stray from it.

12 Try online grocery shopping - If you struggle to stick to your shopping list then try shopping online. It’s easier to stick to a budget as you get a running total, plus you won’t be tempted by the sights and sounds in the shop (see the Cheap Online Shopping guide). If you like Tesco, try their online shopping.

13 Keep a list of your debts/savings targets in your wallet - Every time you open your wallet for a potential purchase you’ll be reminded of why you shouldn’t be spending money. Just a little note maybe folded around your bank card saying “Do you really need it”.

14 Think of your credit card as a debit card - Remember until you pay it off, you’re spending the bank’s money not yours. Using a credit card for cash purchases or withdrawals from the cash machine is the most expensive way to use a credit card. Think of it as a debit card and you might not be so hasty reaching for your wallet.

15 Try Challenging yourself - Get creative and think of it as a challenge, come up with a night out on a budget. Taking us back to our university days of pre-drinks before we get to the club so we don’t get lured in by those overpriced drinks. Picnics in the park or a night in with a movie and homemade goodies to eat. Watch a bit of Jamie Oliver to get inspired.

16 Start a new hobby - This one is one of my favourites. After all, while we are occupied with activities and hobbies this is the time we are not spending money at the shops or online. Spend time on a new (free) activity like running or do some volunteer work. This leaves less time for spending.

17 Pay yourself pocket money - Set up another account for bills and use this to make sure all your bills are paid. I would again suggest an awesome app i use called Duesday. With the money left over, you can pay yourself a set amount which is yours to spend as you like and think of investing the rest in an investment account like Wealthify.

18 Stash your shrapnel to save - Get one of those huge whiskey bottles and when you empty your pockets from the day put all of your shrapnel into it. You’ll be less likely to break a note to spend and once the change has built up, pay it into your account or off a credit card (see the £2 Coin Challenge).

19 Take a packed lunch to work, keeps you out of harm’s way - Ok, so this one has been around for a while but there’s a reason for that, It’s a great idea. Making yourself a packed lunch doesn’t just stop you being tempted by expensive sandwich shops, bakers or fast food for lunch but it also keeps you away from the pub or easy trips out with friends where money flows out. Not to mention a pre-made lunch is likely to be far healthier than a spontaneous purchase from the shops.

20 Make your own at home - Whatever your vice is, whether it’s pizza, beer or frothy cappuccinos, try making it at home for a fraction of the cost.

21 Take the ‘No-Spend Day’ challenge - Try to have a day or two each week without spending a penny (I don’t mean not going to the toilet) Once or twice a week have a day where you spend nothing other than budgeted-for things. Quite often just spending once can break the cycle for the rest of the day.

Ok let’s get back to the bigger picture…

5. Get a Second Job and Pay Down Your Debt Aggressively

Having a second job, even 1 day per week on a Saturday or consistently picking up an extra shift or two is a common practice for people to get out of debt. This may not work for everyone but if you have a full time job providing a set salary then think about an interest of yours and call local companies offering your time for a weekend here and there until the debt is paid off. This way you could mix pleasure with paying off debts while feeling good about yourself at the same time. Once you’ve paid it off then scale back the hours unless you enjoy it of course.

Some people also use their home to generate some extra cash. Is it possible for you to rent out your basement, rent out the storage space in your garage, rent a room in your house (you could maybe do this on Airbnb), rent your car out at the weekends or you can take in a student for some extra income?

6. Get a Consolidation Loan

Find out if your bank could help you to consolidate your consumer debts, compiling them into one loan with a lower interest rate. This could be a very helpful step to get your debts paid off. However, getting a debt consolidation loan will only help if you create a budget that does two things:

1) It helps keep you from building up new debt while you’re paying off the consolidation loan.

2) It allows you to save a bit of money every month.

So the key to benefiting from a consolidation loan and making it an effective tool is to use a spending plan (a budget) to ensure you keep your spending under control and set aside some money each month for emergencies or unplanned expenses which will inevitably occur.

7. Refinance Your Mortgage

If your a homeowner and have enough equity then you could consolidate all your debts into your mortgage.

Make sure you consider all of your options and seek advice from someone other than your lender (since they have a vested interest in getting you to choose this option).

If you do refinance your property and consolidate your debts into your mortgage then you should think of this new mortgage as a debt consolidation loan as discussed above.(even if you get an excellent interest rate from the bank) It’s very important that you keep your spending under your income by following a budget and allocate each month to savings. Maybe set up a standing order to set and forget.

8. Speak with someone — a problem shared is a problem halved

If you’re in debt and you are really struggling to pay it down and cope with everyday struggles of bringing up a family or have a stressful job then seek some advice. Give the money advice service a call.

Free and impartial money advice, set up by government

  • Advice and guides to help improve your finances
  • Tools and calculators to help keep track and plan ahead
  • Support over the phone and online

9. Create a Spending Plan

Ok, we know no one likes the “b”word but we all have to consider creating a budget sooner or later. It simply means a spending plan. It’s key to stay on top of your current debt payments. It essentially means creating a plan so that you are spending less than you earn every month. Remember a great solution to keep track of your bills and help with the plan is to get the app mentioned earlier, Duesday as it will really make life easier for you and it’s free.

I have heard people saying they hate budgeting, but have any of these people actually tried one? Better yet, if you’ve lived all this time without one then how would you know you wouldn’t like having one?

After trying a realistic budget on for size, most people agree that the alternative — being in debt — is much worse.

As we have covered a lot today i won’t go over in brief what we’ve discussed but simply skim through the sub headings again if you need a little more clarity on what to do. I hope these tips and tricks have opened your eyes to the possibilities of climbing out of debt. Remember small actions everyday add up to a positive outcome, just stay consistent. You’ll get there.

by Cameron Marsh