Edited, Tom Guyton-Day
The ‘D’ word is almost deemed as bad as a swear word in society. It is taboo to talk about but let’s be real, everyone at some point or another will be in debt. I understand the feeling of being in debt can be suffocating and can massively impact your quality of life. But debt in itself is not bad, it can increase your credit score if managed well and allow you to buy or experience things without having the upfront cash, it is all down to affordability.
I have come up with my own trialled and tested formula for clearing your debt by working out how much you can overpay by each month to reduce the length of the debt and the amount of interest being paid.
First calculate your take home each month, subtract all bills including the minimum payments towards your debt, see how much disposable money you have left, and then say you want to clear your debt in twelve months, multiply that amount by 12. For example, you take home every month after tax £1200, after rent, phone bill etc, you may be left with £600. This may not seem like a lot of money but by living off a budget, you could slice your debt in half after a year.
Obviously depending on how much debt you are in. But now in theory over twelve months you would have the maximum amount of £7200 spare cash, say you’re in £3000 worth of debt just divide this amount by twelve and you need to over pay every month by £250 still leaving you with £350 ‘fun’ money. You just have to live within your means. Get rid of FOMO and the addiction of online shopping. A debt free or at least a life where you can easily manage your debt is a lot mentally healthier and happier.
I know all this is easier said than done in theory but just paying the minimum payments every month gets you nowhere. The only person winning in the situation is the bank because the longer it takes you to pay off your loan, overdraft, credit card the more interest they will be collecting from you.
Even if you have a low interest percent card.
Moral of the story, don’t complicate debt, live within your means, and always try your hardest to pay more than the minimum amount, even if it is £50 extra a month. Every little helps when it comes to reducing the amount of interest you will be paying.
People will always try and complicate things when giving advice about debt and this can often lead to anxiety and the feeling of losing control of your finances. Take a step back, assess your situation and see what little changes you can make.
Maybe cut a takeaway out once or twice a month, eat in more, have friends over for drinks instead of going out. Learn to accept the position you are in to be able to put yourself in a better position in the future. Being in debt may feel like it lasts a lifetime but in reality once you can mange your debt and make extra payments, a weight will be lifted off of your shoulders.
If you’re struggling with debt payments and you feel you’re in crisis, talk to your bank and contact one of the many organisations dedicated to people in your situation. Links below. It can be daunting but these people can help.
https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/
https://www.stepchange.org/
https://www.nationaldebtline.org/
I have come up with my own trialled and tested formula for clearing your debt by working out how much you can overpay by each month to reduce the length of the debt and the amount of interest being paid.
First calculate your take home each month, subtract all bills including the minimum payments towards your debt, see how much disposable money you have left, and then say you want to clear your debt in twelve months, multiply that amount by 12. For example, you take home every month after tax £1200, after rent, phone bill etc, you may be left with £600. This may not seem like a lot of money but by living off a budget, you could slice your debt in half after a year.
Obviously depending on how much debt you are in. But now in theory over twelve months you would have the maximum amount of £7200 spare cash, say you’re in £3000 worth of debt just divide this amount by twelve and you need to over pay every month by £250 still leaving you with £350 ‘fun’ money. You just have to live within your means. Get rid of FOMO and the addiction of online shopping. A debt free or at least a life where you can easily manage your debt is a lot mentally healthier and happier.
I know all this is easier said than done in theory but just paying the minimum payments every month gets you nowhere. The only person winning in the situation is the bank because the longer it takes you to pay off your loan, overdraft, credit card the more interest they will be collecting from you.
Even if you have a low interest percent card.
Moral of the story, don’t complicate debt, live within your means, and always try your hardest to pay more than the minimum amount, even if it is £50 extra a month. Every little helps when it comes to reducing the amount of interest you will be paying.
People will always try and complicate things when giving advice about debt and this can often lead to anxiety and the feeling of losing control of your finances. Take a step back, assess your situation and see what little changes you can make.
Maybe cut a takeaway out once or twice a month, eat in more, have friends over for drinks instead of going out. Learn to accept the position you are in to be able to put yourself in a better position in the future. Being in debt may feel like it lasts a lifetime but in reality once you can mange your debt and make extra payments, a weight will be lifted off of your shoulders.
If you’re struggling with debt payments and you feel you’re in crisis, talk to your bank and contact one of the many organisations dedicated to people in your situation. Links below. It can be daunting but these people can help.
https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/
https://www.stepchange.org/
https://www.nationaldebtline.org/
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