How to slay the debt monster

The finer nuances of society mean that there are always some puzzling inconsistencies and idiosyncrasies when it comes to views and social norms. One of the more constant stigmas that I’ve known in my lifetime is that surrounding debt. Certain kinds are completely acceptable such as a mortgage – a natural part of life even. But others such as unsecured loans will seldom be discussed with friends, family or strangers, and can even induce a sense of shame!

Perhaps in these challenging economic times, where debt has become more commonplace, necessary and cheaper than it ever has been, this may be diminishing somewhat. But still debt plagues, like a monkey on one’s back, and wreaks destruction in the form of mental health issues, marital problems and many others.

Yet there is another side to this argument too, and many people believe that an unrelenting appetite for credit has, in part, kept the economy ticking along since the Brexit vote. Some even believe we as a nation are living beyond our means. Anyway, no matter which way you spin it – stigma or no stigma – there is no doubt that unsecured debt is something that no one enjoys. But for those facing large balances at the end of each month, the good news is that there are easy ways to start getting yourself out of the debt cycle.

Clear debt with savings

As much as it may feel like you are doing good by tucking some money into savings, it makes no sense to do so while simultaneously juggling unsecured loans or credit card debt. The interest you earn on savings will always be lower than what you are being charged on your debt – especially in the current low-return economic climate.

Consolidate existing high-interest debt(s)

Credit cards are generally the biggest offenders when it comes to high-interest debt, with APRs in excess of 20 per cent commonplace if you are unable to clear your balance at month end. Paying this kind of interest can be incredibly detrimental, and many people get stuck making minimum repayments for a long period of time. If you don’t have the savings to clear these balances, a simple way to cut the cost of these debts is to consolidate it with another, cheaper unsecured loan so that you have less interest to repay each month.

Use a credit card to your advantage

The above point shouldn’t stop you from using a credit card entirely. After all, aside from the fact that it is convenient, using one (or more) also offers other benefits such as boosting your credit score, rewards such as cashback, and 0 per cent balance transfers. But as alluded to above, you want to use it such that you will be able to clear the balance at the end of each month. That way, you don’t lose any money to interest.

Switching as a cost cutter

You know those direct debits that come out for things you take as given? You know, the ones like gas, electricity, insurance, mobile bills? Well, don’t take them as given anymore – switch and save! Energy suppliers in particular are renowned for putting long-time customers on higher tariffs than they should; preying on consumer inertia. But switching utilities can save you hundreds of pounds each year, and it is quicker and easier than you may think. Added to that, institutions like banks even offer big cash bonuses for switching to them. The bottom line: chipping away at your debt is as simple as being a switcher. Don’t delay – switch today!

The pain-free savers

As old-fashioned and uninspiring as a budget may sound, it is still the best way to get a handle on your incomings and outgoings. I find that, rather than speculating about what you think you will spend your money on each month, you should rather record your outgoings as they happen, and then assess things retrospectively. No doubt you’ll be amazed at the luxuries and extras you can easily cut out, thus allowing you to have extra money at the end of each month so that you can eat into your debt without any major sacrifice. Who knew getting out of debt could be so pain-free?