2021 is here and for many people that means one thing: a fresh start. We all like to make new year’s resolutions; things we want to change, improve, or maybe even cut out of our lives. With the 2020 Covid-19 Pandemic putting so many people in financial difficulty, becoming debt-free is a huge goal for the new year for people across the globe. Mountain debts can often seem like a mountain where the peak is always just out of sight. With such a huge task, it is useful to break your debt strategy down into multiple simple solutions. By dealing with each solution one at a time, the cumulative effect can save you a lot of money which you can use to pay off your debts.

To help everyone have a great 2021 here is some simple debt advice for the new year.

1. Write Off Existing Debts

We all want to start 2021 with a clean slate and so if you are able to clear off your existing debts then that is a great first step. The experts from Jubilee2000UK.org explain that one avenue which exists for people in the UK with a lot of debts is an Individual Voluntary Arrangement or IVA. How IVAs work is that when you owe money, you come to an agreement with your creditor to pay back x amount every month for five years. In many cases, this is significantly less than the total which is owed, but it is mutually beneficial as the creditor is at least able to recover some of their money and you are able to write off some of the debt once the five years are up.

2. Use Credit Cards Wisely

Credit cards when used wisely can be a very useful financial tool, but when used irresponsibly, they can be a recipe for disaster. A huge amount of our personal debt comes from credit cards as many people make purchases that they know they can’t afford and put off thinking about paying for them until a later date. Credit card interest rates can be shockingly high and it is so easy to get stuck struggling even to pay off the debt on the interest each month. Don’t look at a credit card as a means to buy something that you couldn’t otherwise afford. Repayments need to be taken into account when you purchase anything on a credit card, and you should never spend beyond your means.

3. Plan Your Finances

One really simple way to gain more control over your money and reduce the amount you waste is to plan your finances on a monthly basis. A well-considered budget is vital for ensuring that you are able to make ends meet and don’t accumulate any unnecessary debt. When you make your budget, look back at the last six months and write down every single expenditure during that time. You will then be able to see exactly how much money you need for your home, car, and bills, and where you are wasting money on things you don’t need. Stick to your budget religiously and you may find you have some extra money left for savings or an emergency at the end of each month.

4. Make On-The-Spot Payments

One easy way which many people get into debt is by purchasing things and arranging to pay for them later. This is a surefire way to end up with mounting payments which you can’t afford, often for things that you don’t even need. This new year, make it a rule to only buy things that you can pay for upfront, and always pause for a moment before you make any big purchases. Over the course of the year, the amount of money you spend on things you don’t really need can really add up, and this money could be far better spent on paying off debt or saving for a treat as a family vacation.

5. Use the Lockdown to Clear Debts and Boost Savings

While Covid-19 lockdown is not a pleasant experience for anyone, it can be an opportunity to make some real savings and clear some debt. Many of us spend a lot of money going out for dinner and other socializing expenses, but this money can be used to pay off debt or to save for something else. Getting through lockdown is all about looking for the positives, so try to make it work in your favor financially.

The new year brings new opportunities and for many people, it is the chance for a fresh start financially. Paying off a big debt can seem like an insurmountable task, but making lots of small changes can have a huge cumulative effect. By following this simple guide, you will be able to seriously reduce your debt and create a brighter financial future for you and your family.