Martin Lewis reveals how balance transfers can help clear debt
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While experts have been reminding people to set manageable goals as they are more likely to stick, it is totally possible to clear debt in just three years according to one expert Maria Nevada, just by following some simple steps.
To get started, most experts would agree that people need to sit down and work out a budget.
This helps people to see in black and white where they are going wrong and where they need to cut back.
Britain’s most famous Money Saving Expert Martin Lewis suggests people gather statements and receipts, fill in a free budget planner and see where money can be saved.
On his website, he states: “Once you know where you’re spending, you can start to alter and prioritise what you do with your money to enable you to stick within your means.”
After creating a budget and looking at where one can cut back, it’s a good idea to then speak to creditors.
This could make a huge difference to the amount a person ends up paying back.
Investment blogger Maria Nevada convinced her creditors to reduce her debt from £100,000 to £80,000 by negotiating a lower interest rate and cleared her debt in three years.
She says: “£20,000 is a huge amount of money and it really helped that we managed to reduce the debt by that much by consolidating our debts into one payment.”
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Other tips that can really help people pay back debt and stick to a plan include changing one’s mindset around money and making oneself accountable.
This could be a partner, friend, another person in debt or a debt counsellor as long as they encourage you to stick to goals when motivation wanes.
While opinion is divided when it comes to whether experts believe people should pay back the debt with the highest interest rate first or focus on smaller debts to start a snowball effect, for Martin Lewis it’s a no brainer.
He says: “If you’ve got lots of debts, list them with the highest APR first.
“Put all your spare cash towards getting rid of that highest interest rate and pay minimum payments on the others. Don’t pay off the big one, pay off the highest interest one.”
Other tips that can help people achieve their debt free journey in three years include:
- Earn more money – look at ways to increase income. This could be a second job or renting out unused assets like a room, unused space or driveway.
- Lower your interest rates – as well as coming up with a consolidation plan to pay off debt, people should consider transferring debt onto credit cards with zero percent interest to help them pay it back.
- Do a direct debit detox – research from Digital TV shows that 2.5 million never use their digital TV subscription or use it less than once a month.
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- Declutter and sell – people can make extra cash to put towards their debt by selling unwanted Christmas presents and other things around the home.
- Turn clearing debt into an obsession – with the right mindset paying off debt can be fun and create endorphins every time a debt is paid off or a smaller goal is reached.
37-year-old Tasnime Rotherham, who spoke to Express.co.uk earlier this year about how she cleared £40,000 of debt, sums it up nicely.
She recalls: “I’ll never forget how good it felt to ring up the credit card companies one by one after clearing the debts to close my account. It was an amazing feeling.”
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