Best ways to control your debt in 2022

Credit cards, loans, and general finance were all considered myths in school. I understood it was critical to creating a credit score – so much so that by the age of 25, I had a £10,000 credit limit. However, the consequences of having a credit card at the age of 18 followed me long into my late thirties and hence it become more important fr you to control your debt in all possible ways. .

After graduating, I decided to pursue a master’s degree, and happily, my postgraduate loan paid the majority of the costs. Despite the fact that I was living at home, the cost of fuel, food, books, and regular monthly expenses meant that I had to use my credit card to pay for my year of study.

It wasn’t until it came time to repay that calamity hit. Because of my spending, I was left with a £1,000 monthly minimum repayment (thanks to extortionately high interest). This, of course, led to sleepless nights and the anxiety that I’d never be able to escape the cycle.

But I accomplished it in the end, and here’s what I learned along the road.

This post is not intended to be personal advice. It can give you advice on how to manage and understand your debt. However, if you are concerned about your debt, you should contact a debt relief organization such as Stepchange.

1. Confront your debt demons

It may be one of the most difficult aspects of debt relief, but sitting down and confronting your debt demons is critical.

A smattering of little obligations, such as phone contracts or ‘Buy Now, Pay Later’ accounts, can quickly build up. As a result, knowing what you owe can help make the debt more manageable and control your debt.

Once you’ve produced a list of them all, be sure you can afford to keep up with secured loans on your house or outstanding debts that could influence your utilities and council tax. Once that is completed, it may be a good idea to prioritize the most costly loans first.

If you are unable to make your debt repayments, contact your creditors immediately. They will be able to assist you in developing a repayment strategy for the future.

For debts such as overdrafts and credit cards, you could consider moving to a lower-interest-rate credit card or account. Shopping around with a comparison website can be beneficial.

Alternatively, you might assess the benefits and drawbacks of consolidating your debt into a single account and repaying it at a lower interest rate over a longer period of time which could be a good method to control your debt.

Taking on extra debt to pay off existing debt may appear to be counterproductive. However, switching can occasionally help you get a handle on your debt. However, be sure you understand the benefits and drawbacks of this extra credit and that you can manage it wisely. Through a good debt management strategy, all short of the option can be managed like Stepchange debt charity

2. Modify your attitude about debt.

Anyone who has taken out any form of loan or credit agreement can certainly attest to the fact that getting out of debt is more difficult than getting into it.

However, behavioral psychology, as well as socioeconomics, have a significant part in debt.

It is a common misconception that low-income households incur the greatest debt. In fact, the majority of consumer credit agreements are signed by people with higher incomes.

Borrowing can also be pleasurable.

Some people might not recognize borrowing as money leaving their accounts. Their brain can practically fool them into thinking that whatever they’ve purchased is almost ‘free,’ which isn’t the case.

The long-term consequences of accumulating debt in this manner, on the other hand, can be costly, and not just financially — it can have a negative impact on mental health and physical well-being.

Changing my attitude about debt has been critical in establishing financial security.

I’ve built up an emergency cash buffer since paying off my debts which is a good and manageable trait to control your debt — we normally recommend having three to six months saved up if you work, or one to three years if you don’t have a regular income. I also have a “fun pot” in which I almost function as my own debtor. I have to pay back the money I ‘borrowed’ from my savings.

It now means that if I ever buy something on credit, such as a new phone, I’ll only do so if I can afford to buy it outright.

Debt, therefore, becomes a choice rather than a necessity for me.

3. Do not be afraid to seek assistance.

One of the biggest mistakes I made in my financial path was not talking about what was going on sooner.

The first person I told about my debt was a financial expert, who suggested I contact one of the free debt charities in the UK.

The organization assisted me in developing a strategy. That took into account all of my debts as well as all of my possibilities.

Only then did I feel like I had some control over my finances. At a time when I was quite concerned about the future of my finances.

I’m now in a situation where I save every month and invest the money. I used to pay off debt and control my debt in all possible ways. I look back today, thankful that I was able to find a solution to my debt.

But I couldn’t have done it on my own.

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