Coping with debt: Start with your personal finances

Most people experience it at least once throughout their adult lives — personal debt. If you’re feeling overwhelmed by the money that you owe to creditors, oftentimes a closer look at your personal finances can help you find a solution to your financial challenges. From negotiating your electricity prices to looking for a way to earn some extra cash, here’s how.

The first step to getting yourself out of debt is to get organised. Bring all of your bills together in one place, whether it is on paper or electronically via email. This will help you put all of the bills you owe into perspective and decide what approach you want to take to paying them off. While some people find it better to start by making the biggest payments on the bill with the most interest, others feel that they get more gratification out of starting with the smallest bill so that they can eliminate the total amount of bills that they owe faster.

Once you have a bird’s eye view of the debt that you owe, you’ll be in a better position to plan how you will tackle them. Going back to basics can help you get started because you already know that the two primary ways to see your balance go down and your credit score go up is to add to your income and subtract from your expenses. It may sound simple, but there are so many ways you can apply these principles to help you.

Firstly, you can increase your income by putting in more work, but this doesn’t necessarily mean longer office hours. While many people in debt look to take on more responsibilities at their day jobs, there are many other ways to make money from home. You can become a high school or university tutor specialising in an academic subject closely related to your field of work. Or you can turn a favourite pastime into a part-time job, such as landscaping, crafts making, or baking.

When it comes to slashing your expenses, remember that cutting out the recreational spending is just one route that you could take. You should also take a look at what you’ve been paying for your bills, such as utilities, and determine if you can get a better price either through negotiating with your company or searching for a similar service somewhere else. Most importantly, you should research the energy prices of other companies, especially since this is one of the household expenses that has increased the most over the past several years. Your chances of finding a better company that offers more comprehensive service and more flexible contract terms are good, especially since the recent influx of companies that are not aligned with the “Big Six”.

Coping with debt is a step by step process that is best completed when you’re searching for answers outside the box. A little planning and ingenuity on your part can eventually lead to a bank account back in the black.