Recovering from debt gets you one step closer to financial freedom and getting your finances back on track. Paying off debt may seem like a daunting task, but the best solution is to tackle it head-on and start taking accountability while on your journey.
Nearly ten million people in the UK are in debt, so know that you’re not alone when it comes to financial setbacks. With the right strategies in place, you can turn your situation around and reap the benefits. Here is everything you need to know about recovering from debt and how it can improve your life.
Recovering
Audit your debt
First things first, you need to collect all the information you can on your debts to get a precise and up-to-date overview of how much you owe. From rent arrears and credit card debt to money you’ve borrowed from friends and family, make a list of your debts before making a plan to start paying it back. You can request a copy of your credit report to check you’ve got all the right details.
Create a budget
Once you know where your finances currently stand, the next step is to create a realistic budget. This should include even the smallest outgoings to help you keep track of your spending and make sure everything you need is covered. Work out your total income and then deduct all necessary spending to identify areas where you could potentially put money aside into savings.
Holding yourself accountable
Getting out of debt means skipping out on certain activities or cutting back on unnecessary spending. This can be disheartening and leave you feeling frustrated but it’s important to remember that sticking to your plan means you can get back to these things sooner in a healthy way. Remind yourself of your financial goals when you are tempted to spend and consistently track your progress.
How your life could improve
More options
Eliminating your debt can be life-changing and opens more options for your future. For example, building your credit history from rented housing can help improve your chances of being approved for mortgages, or even being able to say ‘yes’ to that holiday you could never afford before, financial security can open lots of doors.
Better mental health
Whether you realise it or not, financial trouble can apply huge amounts of stress to your psyche. You may feel that everything is out of control or embarrassed to discuss your situation with any outside help. This can lead to the development of depression and anxiety. Getting out of debt can help to relieve this pressure and significantly improve your mental health.
