COVID19 has left a lot of people with a serious financial headache. Hopefully, 2021 will be the year that it is vaccinated out of existence and the world can open up again. While it’s fine to celebrate, it’s also vital to tackle any debts you have. Here are some tips to get you started.
Polish your credit record
The better your credit record is, the more likely you are to qualify for attractive interest rates. The better your interest rates, the quicker you can pay off your debt. For the most part, your credit record will reflect your ability to manage your money. In particular, you need to ensure that you always pay your bills in full and on time. You should, however, also periodically check your record for mistakes.
See if you can get a better deal
The answer to this might be no, but you’re only going to know if you look. These days, a lot of financial sites will do an initial “soft search” on your credit record to see if you are likely to qualify for a deal before suggesting you apply for it. This means that you can now try your luck without negatively impacting your credit record. If you can’t qualify for a better deal, then make it a priority to work on your finances until you do.
Banish any cash balances
Cash balances always invariably carry a higher interest rate than purchases. One way to deal with them is to use your credit card for any purchases you would have made using your debit card. Then add the cost of those purchases onto your regular payment.
Lenders are legally obliged to put repayments to the highest-interest balance first. This means that even though you used your card for purchases, the repayment will be put towards your cash balance until it is paid off.
Try to make your payment early
If interest is calculated on your average daily balance then the quicker you pay, the less you will pay. If you’re self-employed or paid more frequently than once a month, then try to pay your credit card bill as soon as possible after you receive it. If you are employed and paid monthly then pay your bill as soon as you are paid rather than waiting until it’s due.
You may think you’ve no time to side-hustle. Right now that might be true for some people as COVID19 has laid waste to established childcare arrangements. Once life returns to normal, however, you should make it a priority to see how you can increase your income.
Keep in mind that the term “side-hustling” basically covers just about anything which could earn you a bit of extra money. It can mean starting your own business. It can, however, also mean just “gigging” as and when you can. It can also mean doing temporary work as often as you can. Remember that 2021 is a census year, so there may be opportunities there.
If you do start self-employed work, then remember to register as self-employed. You will need to fill in a self-assessment form. If you’re just gigging then this is very straightforward. If you start earning more serious money then you can use a bookkeeper and accountant. If you take on more than one employed job, then make sure all employers are aware so they can sort your tax.
Hone your budget
Even when you have surplus income, you should aim to spend your money mindfully. When you’re in debt, this is absolutely vital. Anything you buy should be either needed or wanted. That means eliminating basic convenience purchases (like most ready-made food) and impulse spending. Then make sure that you get the absolute best deal on anything you do buy.
For debt advice please contact us.