STAYING OUT OF DEBT
It can be such a relief once you make your final payment to your creditors and can finally say you are debt free. However it can also be an overwhelming period. While of course adjusting from life on a tight budget to having complete control over your own finances can feel great, it can also be a bit daunting. Getting into debt is very easy, one missed payment can escalate very quickly which is why some of our customers can feel wary at the end of their debt plan.
You learn a lot during your debt solution and while it can be tempting to go on a massive splurge at the end, it’s important you don’t get carried away. Today’s post looks at the aftermath of your debt plan and offers advice on how you can stay out of debt.
One of the first and most important steps that will help you stay out of debt is to create a budget. The last words you probably want to hear after years watching your spend is ‘budget’ but budgets are actually really useful. They will help you monitor your spend so you always know how much money you have and when. Write a list of all your income, when you get paid, what bills you have going out with the dates and methods they go out – for example are your bills direct debit or do you need to call up and pay via phone? If you do need to pay by phone a budget will remind you of the date it needs to be paid by – failure to pay by certain dates can lead extra charges to occur. You don’t have to make huge cutbacks once you are debt free but putting together a budget will be useful in helping you managing your finances.
Introduce savings. A budget will again help you do this, once you know how much you have going out you can look at what money you could put aside for savings. Even if you don’t think there’s anything you want to save up for, having a savings account means you are less tempted to borrow money and should anything unexpected happen, you have money set aside ready to help you deal with anything you should need.
Don’t live beyond your means. Overspending is a common cause of debt so we recommend you make yourself aware of what you can and can’t afford. If you can’t afford something, save up for it instead.
Steer clear of credit cards and overdrafts. Credit cards can seem tempting but using credit is a slippery slope – it only takes one missed payment or a minor splurge and things can escalate. Keep your accounts clear and use savings for spends instead of credit. If you use a credit card to help rebuild your credit rating, look for specialist credit building cards with low spending limits and only spend an amount you know you are able to repay immediately.
If you do take out a consolidation loan cut up your old credit cards or shut down credit accounts make sure you don’t reuse old credit as you can put yourself into a much worse position.
If you are nearing the end of your debt plan or have recently completed your debt solution, congratulations now is the time to start enjoying living your life again. While most of these tips might seem obvious they are key to helping you stay out of debt.
We would love to hear from you and talk through options in getting you back on track to financial freedom.