How to get out of debt

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No matter how big or small your debt is, it’s important to clear them as soon as you can to prevent further interest charges. Clearing your debt will also be useful for your credit score in case you ever need to apply for a mortgage or other financial loans in the future. So if you’re on the quest on clearing your debt, below are some of our tips that you can apply to help you get out of debt.

 

Set a budget

The first step is to set a budget for all your spendings. You can divide your budget on different spendings to make it easier to manage them. When setting a budget, it’s important to be consistent and not overspend. If you’re able to stick with your budget until the end, you may find that you have extra cash that you can use to pay off some debt or even save it on the side for the future.

 

Live within your means

Living within your means is when you only spend money on what you earn. You are not living within your means if you are still using a couple of your credit cards. You’re basically in a never-ending cycle of debt each time you use your credit card. What you’ll need to do is to practise on not spending money on things that you don’t need but only spend money on what is essential. It may be difficult at first to stop the temptation of impulse buying. However, it’s one of the primary keys for getting out of debt.

 

Which debt to pay first

When you have a few credit cards, you may have thought of which card to start paying off first. The answer to that is to pay off the card with the highest interest charge. The longer you leave a debt with high interest, the more money you will lose. Instead of paying £30 to pay the interest, you could pay off the debt immediately to reduce the charge.

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