The recent recession has left its mark on households across the nation and many are still grappling with large levels of debt incurred as a result of the financial squeeze. With inflation more than double the government target, the cost of living has spiraled out of control, thus making it difficult to reduce expenses without significant sacrifices. However, in order to get on top of rising debts, it is necessary to cut your spending and there are various ways to do this.
It is essential first of all to calculate exactly how much money is being spent and this includes all expenses, not just the regular monthly bills. Annual costs such as car repairs, school uniforms and holiday costs should all be factored in to ensure the calculation is an accurate reflection of all expenses.
Writing everything down gives an accurate figure of the total monthly expenses and how much, if any, money is left over. It is also possible to more easily identify areas which could be reduced, where maybe in the past there has been a bit of a casual attitude towards costs.
Food shopping is a good example. Many people opt to shop in the supermarket they were brought up with, or sometimes the one closest to their house. However, the savviest shoppers do not have loyalty to just one supermarket, but switch depending on the deals available.
Other areas where substantial savings can be made by shopping around for cheaper insurance rates for your car, your health or your house. It is usually possible to get online quotes, making comparison shopping easier.
For those with a good credit history, it is worth taking a look at the interest rates being charged on credit cards and loans. Many companies are trying to woo new customers by offering very competitive rates. Using an online loan calculator can help calculate whether there is a better deal on the market.
However, it is still possible to reduce the amount of debts even without switching lenders by making a concerted effort to focus on your overall debt, one debt at a time. Pick the debt with the highest interest rate, as it’s the best place to start, and then go from there.