“I’m a debt expert and here’s 7 top tips to clear your debt for good – and why spring is the perfect time to start”

With spring well on the way, it’s a great time to clean, clear and refresh more than just your home. Debt can really drag us down, nagging at the back of our minds, but it’s absolutely possible to tackle it with the right approach.

March is the perfect time to make a new financial start, and Olle Pettersson, personal loan expert at Finanzas Justas, shares seven tips to help reduce your debt for good.

Step 1 – Take ownership of your debt

The first and most important step to tackling debt starts with your mindset. What you need to do is accept it and see it for what it is – a numbers game, not a character flaw. The more debt you pay off, the closer you are to financial control and freedom.

Think about debt in a very clinical way – cut the negative thoughts and assumptions, and simply get cracking on paying it off as quickly as you can, with the least amount of interest.

Step 2 – Clarify exactly how much you owe 

Bite the bullet and write it all down – how much you owe, the APR (annual percentage rate – otherwise known as interest rate) you’re paying on each debt, and what your minimum payments are for each. Once you face it, you can start to fix it. Debt is a numbers game, and there is no number too large to be reduced.

Step 3 – Decide the best method to pay off your debt 

There are two tried and true methods of tackling debt – the debt snowball method and the debt avalanche method. Both work, and it’s important to assess each one and decide which method is better for you, in terms of how likely you are to stick to it.

• Debt snowball method. The debt snowball method taps into basic human psychology, encouraging you to build motivation by paying off your smallest debt first. The sense of reward you get from paying this off, propels you to keep going.
• Debt avalanche method. The debt avalanche method focuses on paying off your highest interest (and therefore most expensive) debt. Just like an avalanche increases in speed and power as it rolls down a hill, paying off your most costly debts first is the fastest and most powerful way to free up your money.

Step 4 –  SLASH interest payments to clear your debt faster

• Talk to your lenders about lowering your interest rate. Lenders can be surprisingly understanding about negotiating a lower interest rate – especially if you’ve previously paid on time. Be open about your situation and demonstrate a willingness to work with them on a solution. Your bank or loan provider may agree to lower the interest rate or introduce a temporary payment plan.
• Transfer your debt. A great way to reduce interest on your debt is to transfer it to a 0% balance transfer or money transfer credit card, with an interest-free period of 12-18 months. A 0% balance transfer card allows you to move the balance from a high-interest credit card onto the new 0% balance transfer card, paying off your old card. You’ll now owe your new card but at a far lower rate.

Tip: It’s better to transfer some of your debt, even if you can’t transfer all of it.

Step 5 –  Create a rock solid repayment plan

Put together a timeline with a realistic end date by which you expect to have paid off your debt. Then, set up key check-in dates along the way – for example, if your timeline is two years for debt repayment, set check-in reminders every three months. You will use these check-in times to examine your debt repayment progress and see if you’re on track, or whether you need to adjust the timeline or make some changes.

Set minimum debt repayments to automatically leave your bank account, and make sure you never miss a payment.

Step 6 –  Cut back on unnecessary expenses

It’s a no-brainer that the more money you have, the faster you can pay off debt – and the more money you can save for the future. Finding extra money doesn’t have to be as dramatic as taking on an extra job (although you can do this if you have the time).

Cancel subscriptions you don’t use, and sell anything that you don’t need – old clothes in good condition, furniture and old but usable tech.

Step 7 – Commit to rewriting your financial future 

In order to break the patterns that led you to get into debt in the first place, you need to think about how you got here. Remember – this isn’t about shaming you for your past, but safeguarding your future, so that you can enjoy financial freedom. Recognise your triggers for overspending, and write down what you want from a debt-free future, to remind yourself every day of the importance of a debt-free life.

Olle Pettersson, personal loan expert at Finanzas Justas, adds: “Taking the first step to tackle your debt is a brave one – but it’s well worth it. Debt is a numbers problem and not a character flaw, and simple things like writing down how much debt you owe and creating a focused plan to tackle it, gives you your power back.

“Debt is rooted in emotions, habit and mindset – once we break the habit of overspending as a way to cope with negative emotion, financial freedom begins”.