Interest rates are about as low as they can go (without actually being negative). COVID19 is still very much around. Brexit is on the way. In short, now could be a very good time to try crushing any debt you currently hold. Here are some tips.
Be very aware of the realities of financial “crash diets”
The problem with financial crash diets is much the same as for regular ones. They may get you short-term results, but they may not address the underlying issues which caused the problem in the first place. This means that, in the long-term, you may find yourself winding up right back where you were before. What’s more, if you make excessive cutbacks, you may find yourself damaging your financial health as much as extreme dieting can damage your physical health.
All that said, there are times when crash dieting is the best, if not the only solution. For example, you may need to lose weight for an urgent operation. Right now, you may have an urgent need to crush your debt to avoid insolvency if your income drops. This means you have to see your current measures as part of a three-step plan. Firstly, you do what you can to reduce your debt quickly. Secondly, you work out what you need to do to eliminate it completely. Thirdly you figure out your path into future financial wellbeing.
Ditch all your convenience, impulse and “sin” buys. From now until the end of your financial crash diet, you shop from shopping lists only. If you absolutely have to buy something which isn’t on your list, make a note of what it is and why you needed it. Then see if your list has to be updated.
Go vegetarian (or vegan, or somewhere in between). Meat, fish and poultry are expensive and you don’t need them, not even if you’re feeding children or teenagers. You do need iron, but you can get sufficient iron from plant-based sources (and you can take a supplement). You also need Vitamin B12 but that is available from eggs (and supplements).
Review your transport. If you use public transport, can you rework your journey so you pay less? For example, could you walk or cycle a bit so you get a lower fare? Could you switch to an annual pass? If you’re employed you can often get a loan to cover these. If your circumstances change you can usually cancel the unused portion of the ticket.
If you drive, could you take public transport instead? If not, are you driving with fuel economy in mind? Could you share your car to help with costs?
Learn to cook. The more convenience food products you use, the more your meals will cost and vice versa. This means that you can potentially save a lot of money by cooking all your meals from scratch yourself. All it takes is a bit of skill and some organisation.
Ditch all unnecessary contracts (or put yourself in a position to do so). As your contracts expire, ask yourself if they relate to something you really need or something you really want. If it’s the former and you need to renew them, then make sure you get the best deal possible. If it’s the latter then try to get a deal you can cancel easily if necessary. If it’s neither, get rid of it.
Upskill yourself. Look at what skills you already have and see how likely they look to stand the test of time. Then look at where the gaps are and see what you can do to fill them. Start as quickly as you can so you allow yourself plenty of time not just to get to grips with your new skill but also to develop a portfolio/showcase and relevant contacts
If you need debt advice please contact us.