Managing your credit to leverage your ability to make more money doesn’t require a degree in rocket science, but it requires a solid plan and the commitment to stick to it. If you feel your debt-to-income ratio is a bit off-balance, you are not alone. According to the TUC, Britain’s mountain of debt has reached a new peak, with UK households averaging £15,385 in debt to credit card firms, banks, and other lenders. Each home owed £886 more than it did the previous year in 2018. Statistics also show that each UK household builds an average of £2,688 unpaid on credit cards, with the Money Advice Service adding that 8.3 million Brits are over-indebted. However, there is a light at the end of the tunnel. You can absolutely find your way out and on the road to earning and saving more money.
Establish Your Budget
The first priority is to plan a budget and stick to it. The ultimate goal of your budget is to spend less than you earn, pay off your debts, and start saving for the future. It’s recommended you use a budgeting software that you can use while mobile to keep track of your expenses in real-time. Successful budgets are ones that avoid adding debt by accounting for infrequent or unforeseen expenses, as well as times of the year when expenses will rise, such as the holidays. You also need to set aside a little for recreation. If not, you will run the risk of going off on a spending binge and splurging. Keeping your life in balance is important.
Consolidate Your Debt
The next step is to pay off your debt. According to Mathew Isaac, professor of marketing at Seattle University’s Albers School of Business and Economics, “Consolidating debt into one spot can be empowering and helpful from a psychological standpoint because it feels manageable.” Put a nominal charge on your card every few months and pay it on time and in full, just to keep the account active and your credit intact. If you find yourself with a high-interest credit debt, it may be wise to get a credit card consolidation loan. This allows you to combine the total amount and pay with a single loan at a lower interest rate. One of the cardinal rules is to leave your credit cards at home. However, closing your accounts could hurt your credit, so one recommendation is to follow the “no-use rule.”
Seek The Help of A Financial Expert
Another wise idea is to consult with a financial advisor, and there is a multitude of them. Many of these are free and can be found online or accessed via the telephone. Counseling is frequently offered by banks and other financial institutions as well as organizations like churches, community centers, and colleges and universities. These financial planning experts can sit down with you, organize a budget, and map out a strategy to keep you on the course to getting back in the red much quicker.
Getting your debt paid off, saving money, and making progress towards your financial goals doesn't have to be a difficult and painful experience. In fact, consider it a way of investing in yourself and your financial future so you will never have to stress about your financial situation again.
