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Hopefully, spring 2021 will see the arrival of the post-pandemic “new normal” so many people have been craving for so long. Part of this new normal will, however, mean the withdrawal of COVID19-related financial support. It will also mean tackling (post-lockdown) debt. Here are some tips to help.

Establish a realistic baseline

Your baseline is the amount of money you need to have a basic standard of living. If you have enough to pay all your essential bills and make the minimum payments on your debts, then you are solvent. If you don’t then you are insolvent. If your initial sums indicate that you are insolvent, keep calm. Firstly, you could be wrong. Secondly, there is always a way forward.

See what you can do to grow your income

Businesses are now finally reopening. So are schools and childcare facilities. Families and friends are now increasingly able to have contact with each other. This means that informal childcare networks can be (re)established. In short, there are likely to be more earnings opportunities available soon, even if you have childcare commitments.

Remember to look at all the options and combine them if necessary. For example, see if you can get extra work. If that brings in enough money to help you tackle your debts well and good. If it doesn’t then see if you can get benefits and/or start a side-hustle as well. Obviously, remember the tax/legal implications of side-hustling.

Monetize your assets

This isn’t just a fancy way of saying “sell your stuff” although it certainly can mean that. It means look at whatever you have and see what you can do to make money from it. This can mean physical assets on intangible ones like skills.

Quite bluntly, the more debt you have the more you need to push to monetize your assets. For example, you might prefer your children to have their own rooms. If, however, you have a lot of debt to tackle, then putting them in one room could leave you space to take in a lodger. Remember, if you qualify for the government’s rent-a-room scheme, the rent will be tax-free.

Minimize your outgoings

This may sound like stating the obvious but it generally takes strategy and planning to do effectively. Your guiding principle should be to do as much as you can with what you have already. For example, you probably have basic household skills, like cooking, so use them instead of making expensive convenience purchases.

Similarly, use what you have in your home already before making any new purchases. If you don’t like something you have, see if there is a low-cost/free way to improve it. If there isn’t, however, then do your best just to deal with it if you possibly can. If you really don’t like it, try to sell it.

When you do make purchases, of goods or services, make sure that you get the best, possible deal for your money. This generally means leaving yourself enough time to think through your various options and do your research on them.

Repay your debts strategically

There are basically two approaches you can use to dealing with debt. One is to focus on paying off the most expensive debt. The other is to focus on paying off the smallest debt. In either case, as each debt is paid off, you move on to the next one.

In terms of pure mathematics, focusing on paying off the most expensive debt will save you the most money. Life, however, isn’t just about maths. In the real world, there may be a couple of advantages to focusing on the smallest debt. Firstly, it can give you a sense of achievement. This can help you keep going. Secondly, it may help to improve your credit rating.

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