While it is possible to live comfortably with manageable debts, there are times when debts can get out of hand.
As long as your income is higher than your outgoings, then you should be able to stay afloat. However, a change in your circumstances or the need to increase your levels in debt for any reason could lead you to a point where you may no longer feel as though you are in control of your money.
Identifying the fact that you are no longer in control over your financial situation is essential. Only when you reach that point will you be able to seek help and make the necessary changes needed in your life to help you overcome your money troubles.
Here are seven ways that you can improve your financial situation when you’re in debt.
1. Sell Unwanted Items
The first thing that you should do if you are struggling to make ends meet and to keep on top of your debts is to sell any items that you own that you no longer need.
Be honest and realistic about your current situation. If you are in debt, clinging onto possessions is not going to help you.
Remember to take the long view. Once you are out of debt, you will be able to save and buy the things that you want. You should also realize that if you were to have these items repossessed because you couldn’t pay your debts, they will be worth far less then than they will be now. So, sell your old and unwanted items now and do it on your own terms.
Use selling sites like eBay and Facebook marketplace to make sure you get a suitable price
2. Go Through Your Expenses
An important start in managing your finances is always going to be to evaluate your current income and expenditure.
If you have more going out than is coming in, something has to give.
Go through all of your accounts and list everything that you’re spending money on. Look at the non-essential spending and cut all of it out.
3. Cancel Subscriptions
Do you use the gym enough to warrant the cost of the subscription? Are you getting the best of all of the different streaming services that you’re paying for?
Go through all of your monthly subscriptions and decide on the ones that you can live without. Then, get in touch with the companies and cancel them.
4. Switch Providers
How long have you been with your energy, internet, or phone company for? If the answer is years, then the time has come to switch.
When you sign up for all of these services, you’ll get the very best deals that they have to offer. Once you’ve been a customer for some time, the prices will go back up and you’ll pay more.
Switch suppliers wherever possible and take advantage of the best deals around.
Don’t forget that you’ll need to switch again before you end up stuck on the higher-priced plan again.
5. Take Out A Consolidation Loan
If you’ve got several different loans, they’ll all have different rates of interest. They’ll also have different lengths and terms. If you have credit card debts, these may have very high interest rates and you may find that you never really chip into the balance much because you’re mostly paying the interest.
It’s time to stop wasting your time chipping away at a juggling act of debt. Take out a consolidation loan and put all of your debts into one single loan.
You’ll have one single fixed payment that will go out. This makes it easier for you to manage your outgoings. Debts that seemed never-ending will have an end date and you’ll be able to see the end to your financial woes.
It’s essential that you remember to keep up with your payments. Don’t take out any new debt on top of this, and don’t use any credit cards once the consolidation loan has cleared them.
6. Get Professional Assistance
If your debt has become too much for you to bare on your own, there is no shame in asking a professional organization for help.
There are several debt organizations that will help you to create a plan for managing your debts. Many will have online resources or will be able to counsel you through your situation.
If your debt has reached the point where there is no longer anything that you can do to pull yourself back into the black, you may need to seek out bankruptcy help.
Bankruptcy should only be considered as a last resort. While debts can be written off in this way, the decision to file for bankruptcy will mean that you will be financially limited for several years.
7. Set Spending Limits
When dealing with debt, it is essential that you get into good habits with your spending.
One of the best ways that you can do this is by setting specific spending limits.
Go back to your income and expenditure and create spending budgets for specific areas of your life. For example, you may want to set a limit on the amount that you spend on food and drink each month.
Look at your current spending and see where this can be lowered. By having a spending limit, it will force you to plan what you’re buying more.
To do this, you should create a shopping list based on a specific meal planner. Create a list of all of the meals that you plan to eat.
Set yourself limits on the amount of personal spending that you have. Put this money into a separate bank account, or withdraw it and spend the cash.
Get Out of Debt and Stay Out
Getting out of debt is hard work and getting debt-free is a major achievement.
Once you’re out of debt, it is essential that you work hard to stay that way. Learn to spot the signs of overspending and resist the temptation to make impulsive purchases.