It’s easy to rack up all sorts of debts throughout life, from credit card balances and outstanding bills to personal and business loans.
While many will be manageable and barely register on your radar, they can collectively add up to quite a significant burden, and become a problem that slows down your progress to achieving true financial freedom.
So what practical steps can you take to reduce the burden of debt?
Assess your debt situation
Start by writing a list of all outstanding debts, how much you owe, the minimum monthly payments and the interest rates attached to each one.
If you’re able to take a look at the big picture, you’ll have more clarity over what needs to be done, the scale of the problem and how quickly you need to pay everything off.
Prioritise high-interest debts
High-interest debts will prove more costly over time, so it’s well worth paying these off first. Not only does this help you avoid huge interest accumulation, it also wipes out the most significant debts first and means you can focus your efforts elsewhere.
Create a realistic budget
You can only put together a debt repayment strategy that works if you have a clear idea of how much money you’ve got coming in and what you’re paying out on various day-to-day expenses.
Once you understand your starting position, you’ll be able to allocate a portion of your budget specifically for paying down debts, without compromising on other aspects of your life.
Speak with creditors
If you’re struggling to repay any particular debts, it could be well worth reaching out to creditors directly and negotiating with them. Letting them know you’re finding it hard to repay the money is far preferable to ignoring the issue and allowing it to get worse.
Simply being proactive and saying something can also assure creditors you’re acting in good faith and encourage them to offer more flexible, manageable payment terms.
Track your progress to stay motivated
Reducing your debt burden takes time, so it can be easy to lose motivation if you can’t see any measurable results.
It’s therefore well worth tracking your progress and celebrating any wins, both large and small, that may occur along the way.
Not only does it help you keep an eye on the outcome you’re working for, but it can give you the extra nudge you need to stick to the plan and hold yourself accountable.
Reduce your outgoings
Examine your spending habits and regular expenses to see where any savings could be made. Even if you can only save a small amount of money, reinvesting it into repaying debts could make a big difference to you in the longer term.
Get professional advice
If you don’t know where to start or want to put together a more detailed debt repayment plan, it could be well worth speaking to a professional, regulated financial adviser.
Consulting with an expert in this field can give you the confidence and peace of mind you need – and you can be sure the advice you’re given reflects your wider financial circumstances and goals.
If you want to speak with a specialist about reducing your debt burden, please don’t hesitate to get in touch and we’ll be happy to speak with you.