The average adult in the UK has debts totaling £31,643. That is a considerable amount of money. So if you are struggling with debt, you are not alone. However, it’s time to tackle your mortgage because it can be quite stressful to owe people money with no hope of paying it back soon. The more debt you have, the harder it will be to save for retirement. And that would make your old age quite challenging to deal with.
Here are several strategies to tackle debt and save more for retirement:
1. Calculate how much you owe
Just how much do you owe? That’s the first thing you should know if you are serious about tackling debt and saving for retirement. It’s time for you to sit down and determine the number of parties you owe, how much you owe each one, and the interest rate each debt is costing you. Confronting your debt puts you way ahead of most people, so take comfort in that no matter how scary the numbers are.
2. Cut back on your expenses
Cutting costs is one of the easiest ways to start saving more so that you can get rid of your debt. You need to keep track of every single pound that leaves your wallet. You must know where it goes and whether the expenses you incur are relevant. Once you do that, you can take steps to cut back your costs.
If you are living in a home that’s too big for you, perhaps it’s time to downsize. But if you are not sure whether it makes sense to sell your current home, ask for expert advice. In the long term, you can benefit more from keeping a house, no matter how expensive you think it is. So make sure the numbers add up.
Cut back ruthlessly on buying things you don’t need. Eat out less, buy fewer clothes and shoes, cut down on alcohol, and stop trying to keep up with the Joneses. The average credit card debt is £2,594. Perhaps it’s time to pay off your credit card debt and only keep one card for emergencies. The money you save from cutting down your expenses should be split into a retirement fund and paying off your debt.
3. Get a better or a second job
In the end, there is only so much you can cut in terms of living costs. To generate enough income to get rid of your debts, you have to get a better job or find a second job. This is where you need to get creative. The second job you do must pay enough to justify the additional working hours.
Is there an extra shift or two you can do at your workplace to earn more money? Ask your manager. You can also try to negotiate for a pay rise. Or you can start a home-based business to fill in the free time you have after work. Alternatively, you can get a job during the weekends. Do something based on what you are skilled at and find a way to make it pay. And after your taxes, ensure most of what you make in that second job goes into getting rid of your debts as well as retirement.
Debt can drain you mentally. When you owe people money, life becomes difficult to deal with. It affects your quality of life negatively and makes it difficult for you to achieve all your dreams. For that reason, you need to get advice from the best financial planners in Surrey if you have no idea of where to start. They will help you restructure your finances so that you can plan adequately for retirement.