It has been 3 weeks since we started the 6-week Money Challenge and we are excited to hear how the challenge is helping people all over the world cultivate a healthier relationship with money. This week we are covering Debt. As the coronavirus/Covi9-19 pandemic continues to affect our livelihoods, you may be worried about taking time off work, loss of income, the future of your job/proffesion all while needingto stay on top of your debts and bills.
Attitude is Everything: As with most things, the first issue to resolve when tackling debt is your mindset and attitude to money. How you respond to debt & money is heavily dependent on your attitude and approach. I recommend that as you begin to address what may seem like a big mountain, you apply hope and positivity to the strategy you will apply to tackle debt. When we see hope, we shift our attention from the problem at hand to finding a solution and we realise that every question or problem has a possible answer or solution. In light of this awareness, you can allow calmness to overtake you and lift any anxiety that your debt is causing. Train yourself to concentrate on the possible solution to the crisis you are facing. Imagine you are trying to find a book in a dark basement and you keep banging your head against the ceiling if you focus on the problem you may try to protect your head and squint harder as you continue searching for the book. If however, you focus on the solution, you will pause and turn on the light so you can see clearly and then proceed to find the book. Pausing and focusing on solutions expands your awareness and is like turning on the light in the basement so you can search for the book better. Applying this same logic to tackling debt, turn your focus to finding the light (by seeking knowledge) to help you find the book without obstruction and remain mentally stable enough to tackle your debt. So arm yourself with knowledge and reset your attitude to finding a solution and you will soon dig yourself out of the deepest hole.
Debt is typically a result of spending money you don't have. This could be to pay for an extravagant lifestyle or you may have had a horrible change in circumstances like being affected by the current Covid-19 pandemic. Like the illustration of finding a book in the basement, the first step is to pause and take control of your spending. (Subscribe to our youtube channel & watch the spending episodes from last week) At the end of the day no matter what happens the most viable way of getting out of debt is going to ultimately come from curbing your spending.
“To tackle debt effectively, reduce your spending and maximise repayments towards existing debt.”
Top tips to help you curb debt:
1. Reduce your expenses Learn to budget as this is the first step towards controlling your spending. If you have debt problems, you need to get a handle on what you spend to future-proof your finances. Most budgets don't work because we don’t stick with them, I advocate setting a date each month with your finances to ensure habits such as budgeting don’t fall away. Sign up for our free money challenge to access our simplified budget planner. Take note of all your expenses not forgetting one-offs such as birthdays & outings.
2. Check entitlements You could be entitled to benefits. The UK government website gives you information about entitlements as well as links to benefit calculators. It should take you approximately 10 minutes to utilise a benefits calculator and check eligibility. As part of your entitlements ensure that you have checked for any other monies you may be qualified to claim such as cashback if you've incurred bank or credit card charges for going beyond your limits. possible PPI reclaims and so forth. This will help you increase your cash flow.
3. Adjust your payments There are several schemes available to help with the current COVID-19 pandemic. Here are a few examples - Payment holidays for your mortgage, credit cards or personal loans may also be possible. You may even be able to defer your insurance payments. Call up your providers and have a conversation about your circumstances. Don’t forget to ask what the implication of taking a payment holiday will be, do not make any assumptions, let them tell you exactly how long you can take a holiday for, what the repayments will go up to when they restart what the impact is overall and ask them to send you a recap of your discussion by email or post so you can refer back to the conversations.
4. Get help Here are some links to free debt help available in the UK Citizens advice Bureau Step Change Debt Charity National debt line
5. Join our Money challenge Facing your financial giants is a 6-week money challenge by MoneyMatiX to help you take a holistic look at your money and create healthier money habits to ride the waves of the COVID-19 Pandemic and any other crisis that may come your way. It is a free guide with access to loads of simple to use and apply resources including how to tackle debt.