X Ways to Reduce Your Debt in 2021

Are you struggling to deal with mounting debt? Making ends meet can be a monthly challenge for people from all walks of life, but with a little forethought and planning – and a good deal of self-discipline – you can get yourself out of the red and into the black sooner than you think.

If you want to make 2021 the year that you take control of your finances and reduce your debt, these handy tips can help.

Stop creating debt

If you were stranded in a boat out at sea that was rapidly taking on water, the first priority should be to identify the leak and plug it, otherwise all your other efforts are destined to be in vain. It’s the same with debt; in order to overcome the problem, you’ll first need to ensure you don’t make it any worse.

While this can be easier said than done depending on your unique circumstances, the easiest way to go about it is to put away the credit cards and focus on spending only money that you have on the things you can’t do without. That means no luxury purchases until you can actually afford them.

Consolidate your loans

Did you know that loan consolidation can be great tool in reducing your debt? Instead of paying off interest on several smaller amounts simultaneously, you can find yourself a single lender and take advantage of the lower interest rate that they provide. That’s especially true in the wake of legislative changes which introduced an interest rate ceiling on consumer loans in July 2020.

Not only will consolidating your loans allow you access to potentially lower rates of interest, but it will also make managing the debt far more straightforward. For those who find themselves struggling to keep abreast of various repayment plans, that kind of simplicity can be a life saver.

Reduce your living costs

One of the best ways to tackle your debt without increasing your wage is to address your outgoings. Make a list of all of your monthly expenses, including things like rent, utility bills, phone provider, travel, food and additional items that you periodically purchase.

Then, go through each one and examine how you might be able to curb your spending on it. That could be something as simple as cutting out expensive brands in your weekly food shop or walking or cycling instead of taking public transport – or more substantial actions such as relocating to a cheaper home or switching your phone, electricity, gas or broadband provider.

Don’t be afraid to ask for help

Of course, everyone’s individual situation will be different and not all of the options provided above will be feasible in every situation. However, burying your head in the sand by ignoring your financial woes is the very worst possible course of action you can take, since the issue is only like to become exacerbated if you don’t address it.

If you’re really at a loss to know how you can make inroads into your personal business, it might be an idea to talk to a professional about your options. This can be an accountant, citizens advice agent or bank representative – or even an experienced friend or family member. Remember: a problem shared is a problem halved.