Trying to think of a new year’s resolution? One of the best resolutions that many people could benefit from would be to become debt free. Becoming debt free will improve your financial health, but you will also find that it can benefit just about every aspect of your life as well. Interested? Read on to discover why this is such a worthwhile resolution for 2023.
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How Living With No Debt Can Change Your Life
If you have debt in life, it can follow you around like a storm cloud and impact every financial decision that you make. When you can become debt free, this storm cloud will dissipate, and you will feel like a weight has been lifted. Many people find that eliminating debt helps to reduce stress, improve happiness, and even improve sleep (this can then impact practically all areas of life).
In addition to the above, cleaning debt can also improve your financial well-being and improve your credit score. It then becomes a lot easier to plan major life events, such as getting married, going to university, buying a house, and even going on holiday.
How to Reduce Debt
The benefits of clearing your debt are obvious, but how can you go about doing this? It is not always easy, but there are a few steps to take that should help you to get there (or at least minimise your debt).
Create a Budget
Often, people struggle to clear debt because they do not control their monthly spending. You should create a household budget that allows you to divert a percentage of your monthly income towards clearing debt – the higher the better,
Slash Costs
When creating your budget, you should list all of your regular expenses and then work through each one to find ways to make savings. There are always ways to make savings on regular expenses, such as:
- Switching suppliers
- Reducing energy usage
- Ditching services and subscriptions that are not essential
- Shop at a cheaper supermarket
- Buy non-brand products
- Cut back on luxuries
Focus On High-Interest Debt
You also need to work out exactly what you owe as many people have multiple debts. You should prioritise clearing debt with the highest interest, which will help you to save money over time.
Cut Debt Costs
In many cases, you can cut the cost of your debts by changing the arrangement with the lender whether this is moving your loan or remortgaging.
Consider Debt Consolidation Loans
It is also worth looking into debt consolidation loans. Essentially, this involves combining your debt into one loan and this can make debt easier to manage often it is cheaper than paying multiple debts with multiple interest rates.
Hopefully, this post will encourage you to become debt free in 2023 and enjoy all of the benefits that this can bring.
