Here, we're tackling step 3 of our 4 step debt action plan: recover from debt and stay in control of your money for good.
Step 3: Stay in control of your finances
As well as patting yourself on the back for what you've achieved so far, there's plenty that you can do to develop good habits and prevent yourself from falling back into old ones. Here are our top tips to help you stay in control and enjoy life.
To help you reach your goals and take control of your debts we’ve broken the process down into 4 manageable steps, giving you easy to follow to-do lists to help you master your money. If you missed step 1 or step 2, check those out first for tips on working out where you stand and for paying down your debts.
Keep using your budget
We know what you're thinking. 'Make a budget' - how groundbreaking. But it's honestly one of the best ways to make sure you always feel in control of your money, rather than feeling like money controls you. Hopefully, you’ve become a master budgeter after following our tips to pay down your debts in step 2. Even if you haven’t, there’s no better time to start than now. Your budget will help you stay on top of your money, know exactly where it all goes and even allow you to set (and more importantly achieve) any personal goals.
Read this quick guide for our top tips on creating (and sticking to a budget).
Keep tabs on your credit file
If you're recovering from debt and have lots of missed payments or a court settlement on your credit report, you may not be able to get the best offers on credit just yet.
But don't worry, there's plenty of things you can do to repair your credit score. Try to spend little and often on a credit card. If you treat it like a debit card - only spending money you know you have - then you'll show lenders that you can now manage credit like a pro.
As you recover, so should your credit score - this will be a great way to see some positive change over the longer term and it will also help you to know your options should you need new financial products.
Read our 10 steps to a great credit score guide to give yourself a steer in the right direction.
Consider future life events - buying a home, kids going to university. Let these events influence your priorities, savings, and overall money objectives, rather than accumulating unmanageable debts for things you don't particularly care about or need.
Be a savvy consumer
Know what you’re buying and why. Make sure you’re always getting the best deal by doing some research and not making impulse buys.
Make sure you’re getting what you deserve - stay on top of changes to benefits and check your tax code if you change jobs or have changes in employment income.
Don’t forget about employee benefits, such as free medical insurance and travel discounts. It’s easy to forget about everything that’s available especially if you’ve been working for some time.
Consider the impact of borrowing
The majority of us need to use credit from time to time to fund big purchases, and when managed well this is normal. But if you've struggled with debt in the past you may want to go slow with credit to begin with.
If you do want to borrow money again in the future, consider what you can afford, why you're borrowing and whether credit is a good option for you. Use direct debits where possible to make sure you don’t miss payments, and sign up for alerts from your bank so you can keep track of exactly when the money is going out.
Recognise the signs
Spend some time reflecting back on when your debt started to feel unmanageable and try to understand what triggered it in the first place.
Was it emotional spending or the pressure of keeping up with friends or something else entirely? If you can recognise what led to the spending habits that first got you into debt, you'll be better placed to nip them in the bud before they become a problem.
If you feel like you may be slipping back into your old ways, there's no harm in reaching out and getting some help.
Continually improve your relationship with money
Building up a healthy relationship with money takes time and, just like with any relationship, there are going to be ups and downs.
If you've been dealing with difficult debts, think of it like a rough patch: debt doesn't have to define your whole relationship with money, just as debt doesn't define you.
The key thing is to learn from the past and work on developing better and more sustainable money habits for the future.
Ready for step 4? You’ve come so far in your debt journey - don’t stop now!