Why not take financial control back?

The start of a new year can be a time for reflection and new beginnings, and if you are thinking of tackling your debt this year, you are not alone. Many people have committed to reducing their deficit as part of their New Year Resolutions, and it is not hard to see why. Consolidating debt can relieve stress levels and give you control of your finances again.

Related: Ins And Outs Of Debt Collection Agencies

The first thing you should do is confront your debt. Is it growing? Has it been hiding in the background, untouched for a few years? Is it a credit card debt that spiraled out of control over Christmas? Or is it a gradual build-up of debt accumulated over several years? Look at how this debt has come about, and try to stop excess spending now.

Another point is that you should be honest about your debt. If you have hidden debt from your partner, consider telling him or her about it. As the saying goes, a problem shared is a problem halved, and however embarrassed you are, it could help your situation.

You need to look at what extra money you have come into the household, which will help pay down your debt. You can also save money by setting up a regular savings schedule. 

Wonga suggests many small sacrifices you can make to help you save money. Remember that a little goes a long way! Their comprehensive list of savings includes cutting down on electricity use, growing your own vegetables, and ditching that weekly takeaway.

You should create a good plan for paying off your debt and stick to it. CNBC says that one of the most effective ways to clear your debt, which you should consider, is the avalanche method. You should ask a professional debt consolidation company to help.

They say, “Mathematically, the most effective way to eliminate debt is to follow the avalanche method, in which you list your debts from highest to lowest by the interest rate. Pay the minimum balance on each, then dedicate as much as you can each month to the one with the highest interest rate.”

Alternatively, you might consider the snowball method, which “prioritizes your smallest debts first, regardless of interest rate. To try it, list all your debts, from smallest to largest. 

Pay the minimum balance on each one, except the smallest. For that one, dedicate as much cash as possible each month until it is repaid. Then move on to the second-smallest debt….” 

This works for people who like to see their debts disappear quickly. It helps you to gain momentum, just as you would watch a snowball grow bigger and bigger. This can be a much more motivating method to pay down debt.