Debt may seem scary and debilitating, but even taking small actions can help ease you out of debt.
Work out exactly what you owe
Make a spreadsheet of all your income and expenses so you can see exactly what you owe and who you owe it to. Include everything from those big mortgage payments to your daily coffee run and check you are getting all the income you are entitled to, such as benefits or tax credits.
Once you have all this you will be able to see how much money you have left, after your living expenses, which can be used to tackle your debts. It will also highlight areas that you can cut spending.
Switch utility suppliers
Energy prices have been falling in recent months due to the drop in oil prices. This means you could be paying too much for your gas or electricity bills. Switching supplier could save you hundreds of pounds. Even moving to direct debit or just dealing with your account online could save you money.
Check comparison websites or even your own provider to see if you can make savings.
Identify luxuries and eliminate
Look at your spending habits and work out what is essential and where there are luxuries you could eliminate. These treats may not seem expensive when purchased each day but added up over a week, it could quickly eat into your income.
For example, buying lunch each day at a café or sandwich shop could cost around £5, which is £25 during the working week and adds up to £100 over a month. By making simple changes like taking a packed lunch, you could start making savings. If you’re a coffee addict, cutting down on the daily coffee habit could save you around £600 a year.
Another great idea is buying individual ingredients in your weekly shop, which will work out cheaper than buying prepared food.
Destroy your store cards
Store cards can be tempting if you are desperate to buy a high ticket item. They will help you get your hands on a dream sofa or kitchen without having to pay everything upfront, but if you struggle to keep up with repayments you could see the interest rate hiked, meaning you’ll pay well over the odds for your dream product.
If you think you cannot afford something in the long run, it is probably better to avoid the lure of store credit. You may also find similar products for cheaper by shopping around online.
Switch your mortgage
Mortgages have reached record lows in recent years, aided by low Bank of England interest rates. This means if you haven’t remortgaged in the past five years or so, you could be paying more than needed for your home loan.
Use a mortgage broker or comparison websites to find the top deals and discover whether you could cut your monthly repayments. Remember you may still have to pay early repayment charges and booking and legal fees, so it is important to take these costs into account when making comparisons.
It is easy to get stressed about debt, but doing one thing at a time and taking little steps to avoid the traps can help you gain peace of mind and get you well on your way to a debt-free life.