![](https://cdn.prod.website-files.com/6209070ba316bd42619c93a5/669a15210897baff29c52154_Banner-Blog.png)
Everyone knows that saving money is difficult, but you know what’s harder? Trying to pay off huge amounts of debt! Of course, it’s not always possible to live without any loans, especially something like a home loan that might take 20 years or more to pay off, but you really don’t need to rack up unnecessary credit card or store card debt.
Avoiding this kind of debt is easier than you think. Here are a four healthy habits that can lighten the load and take you one step closer to financial freedom.
1 Reduce or eliminate
If you’re deep in the debt trenches already, let’s get you out ASAP. The first step is to formulate a clear strategy to make sure you can pay the minimum monthly instalments as well as some additional payments. Two strategies that work are the snowball method and the avalanche method. Another option is to speak to your bank and consolidate multiple loans into one single loan, which might get you a lower interest rate. This can simplify payments and potentially reduce your monthly expenses.
2 Create healthy habits
Interest is a double-edged sword: it can grow your savings (good!) but it can also make your debt far more expensive (bad). To maximise the good side of interest, set clear savings goals and put money into a savings account via a monthly debit order so you’re not tempted to spend it. Use 22seven to make a budget and you’ll quickly see where you can cut back on monthly spending. Clothes, takeaways, coffee… These are good places to start. Use the money you’re not spending on frivolous things to beef up your savings or pay down your debt. And don’t forget about an emergency fund… This kind of savings account will prevent you from needing to go further into debt if you need cash fast.
3 Avoid common pitfalls
If you’re prone to falling for online deals and promotions, quit scrolling and delete those apps. A credit card should be your very last resort when buying something at the shops. Only use a credit card if you can pay off the balance in full each month.
Lifestyle creep is another common pitfall for taking on more debt. As your income grows, resist the temptation to move to a bigger house or buy a fancy car. Instead, save or invest the extra income. Stick to your budget and your financial plan, even if it seems hard at the time. Consistency is key!
4 Increase your income
Battling to make ends meet? Embrace the side hustle. From freelance work to selling handmade goods, any extra income you can bring in will help pay down your debt faster. If you have limited time outside of your job, consider enhancing your skills through courses and certifications to increase your earning potential down the line.
Remember, getting rid of debt is a long game. It might be hard right now, but chip away and you’ll soon see the rewards of your efforts.