4 Habits to Change To Get Out of Debt

4 Habits to Change To Get Out of Debt

Going from struggling financially to becoming debt-free isn’t a quick or easy process, but it’s possible. It starts with changing the way you think about debt and the way you approach your finances in general. If you want to get out of debt and stay out for good, these are some financial habits you must change. Changing these habits won’t be overnight as they say it takes 21 days to change a habit. So, let’s dive in…

Facing Your Problems

The first step is to figure out how much debt you have and how it is impacting your finances. One of the quickest ways is to measure your debt-to-income ratio, a number that tells you how much of your income goes toward paying it back. You might not need a calculator to tell you that, but seeing the facts and figures will help you come to terms with how much debt you really have.

Stop Taking on New Debt

When you’re ready to conquer your debt, your credit card habit will be the hardest to break, especially if you’ve been relying on credit to make ends meet. However, this requires you to stop taking on any additional debt – including new credit card purchases – and start living within your income. It will be an adjustment, but one that’s well worth it.

Start a Budget

Having a budget gives you a plan for spending your money and ensures you’re using every dollar intentionally. You may feel like you’re doing fine managing your money without a budget, but to get out of debt, you’ll have to take your money management to the next level.

There are more than a few benefits to making and using a budget to manage your spending. A budget will help you make the best use of your income, find leaks in your spending, and put together a plan to pay off your debt. The sooner you create a budget, the more control you’ll have over your money.

Live Within Your Means

Many people wind up in debt after consistently spending more money than they were bringing in. Theoretically, it sounds impossible, but if you factor in credit cards and loans as spending instruments, you’ll see how easy it is for your spending to exceed your income month after month.

You’ll have to reduce your spending below your income so you’ll have some extra money to chip away at your balances. That may mean cutting out some of the frills you enjoy, but you’d be surprised at how quickly and easily you can adjust your lifestyle.

Top Tip: If you’re in need of financial advice, seek advice from Money Advice Service for free of charge.