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Believe it or not, more people than you expect will be in debt, whether that’s paying off a mortgage, credit card bills or various other forms of financial help they’ve taken out in the past. Some debt is more difficult to pay off than others, and how you manage it depends on your monthly income, and the terms and conditions. Whilst finding the best payday loans uk can be helpful if you’re faced with an emergency and struggling to make ends meet, you should make sure that you have a plan to help you pay back your lender. Read on as we look at how you can survive being in debt.
Impact of being in debt
There may be many reasons why you’re in debt – maybe you needed financial help in a time of unemployment or low income, or maybe you’ve struggled to manage your money in the past. More recently, it may be due to the rising cost of living, and how difficult it is becoming to stretch our income to meet our needs. Unfortunately, if you have taken out credit in the past and you’re still paying it off, it may be affecting you in more ways than one.
Here are a few impacts of being in debt:
- Impacts your cash flow: If you’re paying off debt, a portion of your income will be going towards paying it off. This is an additional cost each month that takes up cash that you could be used in other areas of your life.
- Affects your credit score: If you have taken out loans in the past and struggle to repay them, this can harm your credit score. Your score shows lenders how trustworthy you are when it comes to paying back what you have borrowed, so the lower the score, the less likely you are to be accepted for finance in the future.
- Mental health: Not only does being in debt disrupt your finances, but it also has an impact on your mental health. Knowing that you are in debt, especially if you are struggling to repay it can lead to worries, anxiety, and bad sleeping habits – which can impact your overall health too.
How to survive being in debt
If you’re in debt and you’ve noticed some of the impacts listed above creeping into your life – don’t worry! There are ways that you can improve your situation and give you a boost towards improving your finances.
Here are 3 tips you could use to help you survive debt.
- Pay more than you need to:
- One of the easiest ways to get rid of your debt quickly is to pay more than you need to. Although this may seem strange at first – your debt is going to be taking up more of your income in the short term – it makes sense to focus on your repayments so that you can be free of your debt more quickly. This means that you will be able to free up your cash flow sooner so that your finances can benefit.
- Increase your income:
- This seems like an obvious way to manage your debt, but it is one of the most effective! Your monthly income dictates how much you can spend on paying your lenders what you owe, so what better way of increasing your payments to get rid of your debt completely than increasing your income? Getting a second job or turning your hobby into something you can make money from means that you will be able to improve cash flow and focus on paying off your outstanding credit for good.
- Adapt your budget:
- Creating a budget is one of the best things you can do to help you manage your finances. It can help you to identify how much money you have left over each month, and how much you can afford to pay towards your debt. Your main focus when it comes to managing your finances should be to pay off your debt, so creating a budget that is focused on this goal is important. Adapt your current budget by cutting back on unnecessary spending and using that money to go towards your monthly debt payments. The more money that you can focus towards reducing your debt, the better.