Different Ways You Can Get Your Finances Back On Track This Year
The last few years have caused significant financial stress for many hardworking people in the UK, mostly due to inflation, rising living and rental costs, and increased taxation.
With the cost of living rising faster than wages, it’s no surprise that plenty of Brits have had to borrow money just to cover everyday expenses.
However, staying in control of your debts is essential to avoid lingering money worries. If you’re looking to get a handle on your debt, here are some effective strategies to help you build back your financial stability.
1. Make a payment plan
The first step is to assess exactly how much you owe. Create a detailed breakdown of your debts, including interest rates and monthly payments.
Once you have a clearer picture, try to prioritise repayments based on urgency. Bills should take priority because missing these could lead to consequences like legal action.
For other debts, such as credit cards or overdrafts, you should aim to pay at least the minimum amount each month. If you can afford it, try to focus on making extra payments on your debts with the highest interest rates.
Using a digital credit card with built-in budgeting tools or a personal finance app can help you track your spending and stay on top of repayments.
2. Consider debt consolidation
If you have multiple debts with different interest rates and payment deadlines, consolidating them into a single loan might be a sensible idea.
Some banks and lenders offer debt consolidation loans, which combine your existing debts into one manageable monthly payment, and sometimes at a lower interest rate.
However, debt consolidation is usually only available to those with a fairly good credit score. Before applying, it's worth learning how to improve your credit score if it's currently low. This might include making payments on time on existing debts, reducing credit utilisation, and checking your credit report.
3. Cut down on spending
Reducing unnecessary expenses is one of the quickest ways to free up money for debt repayment. Start by reviewing your monthly outgoings and identifying areas where you can cut back. A few simple everyday cost-saving strategies include:
· Switching supermarkets
· Looking for discounts, offers, and own-brand products
· Avoiding impulse purchases, especially online orders
· Cancelling subscriptions that you don't use
Additionally, be mindful of recurring contracts and insurance policies. Some insurance providers automatically renew policies at higher rates, often with little notice, so try to compare deals before your renewal dates and negotiate.
4. Boost your budget
Increasing your income can make a significant difference in paying off your debts faster. If you have spare time, think about taking on a side hustle to help you earn some cash on the side. A few of the most popular side hustle types include freelance work, tutoring, and selling unused items.
You could also explore ways to earn more within your current role. Working overtime could be an effective short-term solution, or exploring progression routes could lead to a higher-paid position.
5. Seek professional advice
If your debt feels overwhelming, don’t hesitate to seek financial advice. Charities and organisations like Citizens Advice or the National Debtline could offer guidance and support tailored to your situation.
These providers can help you create a realistic repayment plan, negotiate with lenders, and explore different solutions from debt management plans to individual voluntary arrangements.
Managing debt takes discipline, patience and structure, but with the right approach, you can take back control of your finances and work towards a more stable financial future.