What is debt?

Debt is simply as sum of money owed to another party.

Chances are that we all know someone who is in debt, has been in debt or is trying to get out of debt. Quite possibly, you have had some kind of debt yourself too. It is an increasingly common problem and studies show that over 27 million headed into 2020 with debts hanging over them.

Studies have shown that people who are in debt tend to suffer from higher levels of anxiety and depression. The whole thing can turn into a vicious cycle for some people. Feelings of stress and anxiety may lead to an increase in spending which, in turn, causes greater stress and anxiety and, therefore, more emotional spending.

Let’s take a look at some of the things you can do to help pay off those debts.

1. Know what you owe

It sounds obvious but it is essential that you know how much debt you have. You will then be able to set yourself workable goals and this will help you to stay motivated.

I had my head firmly buried in the sand and had no clue how much debt I had. When I went through my paperwork and added it all up it was a shock, to say the least. £21k! I even found credit card debt I didn’t know I had. It may sound strange, but I actually felt a sense of relief. I now knew why I had no money left at the end of the month. It was all going towards debt!

Once you have written down all of your debts, give yourself a pat on the back. You’ve just taken the first step, and this is often the hardest part. It takes a tremendous amount of courage to face what you have feared for many years.

2. Choose your strategy

Having a strategy will help to keep you on the right track.

If you only have one debt, your strategy will be easy. Simply pay as much as you can each month towards that debt.

If like the majority of people in debt, you owe money to more than one company you will need to decide which debt payment method will work best for you.

The two most popular and well-known methods are the debt snowball method and the debt avalanche method. Both work in exactly the same way. You pick one debt to focus on and set all of the other debts to minimum monthly repayments. You then throw as much money as you can afford to at your focus debt. Once the focus debt has been paid off you then move onto the next debt on your list. Keep all of the other debts at minimum repayments but, again, throw as much as you can towards your new focus debt in addition to the amount you were previously paying towards the debt you just paid off.

The only difference between these two methods is the order in which you pay off your debts. With the snowball method, you pay off your smallest debt first and work your way up to the largest debt. With the avalanche method, you start on the debt with the highest interest rate first and then work your way all the way down to the debt with the smallest interest rate.

There are pros and cons to both. Psychologically, the snowball method is ‘easier’ as you can plough through the smaller debts quite quickly and feel a sense of achievement early on. But the avalanche method makes more sense mathematically. Ultimately, there is no right or wrong method. It’s a matter of personal preference and as long as you’re paying down your debt that’s all that matters.

3. Write up a budget

Before you run for the hills let me just say that writing a budget needn’t be scary. All it is is a household’s money in versus money out.

Having a budget means that you have a spending plan for your money. It ensures that you won’t run out of money and will help you to stay out of debt or get out of debt if you are currently in debt.

If you’ve never written a budget before, take a look at my step-by-step guide.

4. Use visual charts

It can be immensely difficult to stay motivated when paying off debt, especially if you have a large amount of debt.

This is when debt trackers and templates come into their own. I honestly think it would have taken me twice as long to pay off my debt if I hadn’t used fun trackers to help me along the way. There is nothing better than colouring in another block on your chart when you have made a payment towards your debt.

5. Meal plan

By simply planning the meals you eat each day can save you a small fortune and the money you save in this area can be sent towards your debt.

Meal planning means that you become more organised. You will know what you need before you hit the shops, meaning that you are less likely to buy things you don’t need.

Planning my meals each week in advance saves me a fortune. I went from spending approximately £600 per month on food per month to being able to spend just £300. This is for a family of four and two cats! As well as saving a vast amount of money, I was stressing less about what to cook for dinner each night.

You can use a pretty planner, such as the one below to plan out your meals for the week or you can just write it down on a piece of paper. As long as it ends up saving you money it doesn’t really matter.

6. Increase your income

This is probably one of the more powerful ways to clear your debt more quickly. Many people realise that by increasing their income means that they don’t have to compromise their lifestyle. So they start to look for additional ways that they can make some extra money.

You could start by asking your current employer if you could work some extra hours. But sometimes this just isn’t practical and you may need to find ways of making extra money while working from home.

I found that I could make very good money on top of my regular work by doing matched betting. I also completed online surveys at night when the children were in bed. Both of these combined meant that I could increase the amount I was paying towards my debt by quite an extent.

Other ways to make money include renting out a spare room, renting out your drive, doing paid market research, and selling things from around the home that you no longer need. In fact, just last week I sold a pair of school shoes that my son had outgrown for £35 and put that money towards his next pair.

7. Negotiate your bills

So many people auto-renew their policies when it comes to renewal time. If you are one of these people make a vow to stop doing that right now! It is undoubtedly costing you so much money.

Next time your renewal notice pops through the door, instead of filing it away or throwing it in the bin, take a few minutes to go online and see if you can find a better deal on one of the price comparison sites. One of my favourites is Compare the Market. Nine times out of ten you will find a better price. If you really want to stay with your current provider, give them a call and ask them to match the best price you’ve found. If they can’t or won’t then don’t hesitate to ditch them.

You can do this for your car insurance, pet insurance (beware if your pet has a pre-existing condition though as once you switch you may not be covered for that condition), home insurance, broadband, gas and electricity etc. They savings to be bad are huge.

8. Ditch the hairdresser

Going to the hairdresser every month can cost an absolute fortune. When we were paying off our debt we cut back in every area. Even my hair wasn’t safe. My husband watched a few Youtube tutorials and was then let loose with the scissors. The end result was actually not too bad. Despite having paid back all of our debt, hubby still cuts my hair and I now send that money towards our savings.

As well as cutting your own hair you could colour your own hair at home. It’s very easy to do and there are now a huge variety of products on the market.

Read more

Below is a selection of articles from other UK money bloggers, sharing their own experiences with debt and showing you how you can reduce your own debt burden.

Becoming debt-free: 5 things you can do
Let’s talk about debt: Debt awareness week.
7 steps to pay debt faster
10 steps to get out of debt
Embrace frugal living to pay off debt
Let’s talk about debt
Drowning in debt? 9 ways to build yourself a life raft
How I got myself out of £35,000 worth of debt
How debt affects mental health
Can you pay off your debt? Here is how you know for sure (and what to do about it if you find you cannot)
5 Amazing debt charities that give free debt advice (National Debt Awareness week)
How I paid off £12,000 in 2 years
What can a debt adviser do to help?
How to get out of debt on a low income