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Two very simple steps to clearing January debt

We’ve had Black Friday, Blue Monday, and more than a few grey Tuesdays and Wednesdays. And damp Saturdays.

On top of that we’ve all probably had a lurgy and there are all those Christmas credit card bills to come. No wonder we all get the blues in January. And it’s a five-week month so we’re all broke for the last week to boot.

So, what to do if you are flapping a bit about that monster credit card bill you might be expecting.
Actually, it is really quite simple.

The important thing before you deal with any debt is to focus on the outcome – on your new goals for savings and what you can do with them when the worry of debt is behind you. That keeps you in a positive mindset, which is always a good thing. But it’s worth first pointing out that though savings might make you feel better as a cushion, debt is costing you more than you can make on interest on your savings – much more.

Given the top-paying cash ISAs around at the moment are paying around 2 per cent and the average credit card annual interest rate is around 23 per cent, according to research group MoneyFacts, that’s a gimme.

First then, any cash savings, deploy them immediately to the credit card bill, whilst leaving yourself something as an emergency fund, just in case.
Then take a seat and using the analogue technologies of a piece of paper and a pen, work out exactly what you owe.It might sound trite but it really does help and gives you a much clearer picture of the damage which needs to be undone.

Secondly, figure out how to pay it off. Again, at the risk of sounding blithe, it really does help. Write down income, outgoings and how much you can afford to use to pay the card.

Never pay off just the minimum each month as you will never make serious inroads into the debt itself. Pay as much as you can each month without actually crippling yourself. You could consider switching the debt to one of the many cards on the market which offer interest-free switching.

You can research that here

So then you can look forward to the season of renewal with a Spring in your step.

PS. All this is assuming you are not in a critical phase of debt in which case you will need some professional help and you need it now.
The charity Stepchange https://www.stepchange.org/ has a long history of helping the terminally indebted back to financial wellbeing

By Steve McDowell

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