Why is it so hard to get out of debt?

With the cost of living at an all-time high, is there any wonder why it’s so hard to get out of debt? We discuss this in our latest blog.

Energy prices are expected to rise over 50% by April 2022, impending rail fare hikes of 3.8%, and inflation at over 5% (the highest in almost three decades), it’s getting increasingly expensive to get by in the UK.

These external factors are largely beyond our control and focusing on them can make you feel helpless about your debt situation.

However, in today’s blog, we’ll explore why it’s so hard to improve your financial situation by focusing on factors within your control. Once you identify them you can take the steps to combat them.

The Ostrich Effect

The Ostrich Effect is where you metaphorically bury your head in the sand in order to avoid negative information. This is a common thing to do when debt has reached unmanageable heights.

Unfortunately ignoring letters from the bank and creditors will not make the problem go away. Debt must be tackled head-on. While this is easier said than done, ignoring the debt and not making repayment attempts will only exacerbate the situation.

If you’re finding it hard to change your situation and want help on your debt-free journey, reach out to debt relief charities like StepChange and Citizens Advice for support.

The danger of minimum repayments

How can you solve a problem if you don’t know you have one? It’s one thing being in denial about debt, it’s another thing to not realise you have a debt problem.

We’re constantly bombarded with advertising from retailers promoting buy now pay later schemes, coupled with the rise in online lenders, so it’s never been easier to access credit.

In the UK debt is normalised. Many people don’t see it as an issue and only make minimum repayments. This is a trap. Debt is affordable until you cannot afford it.

The pandemic has shown that life can change in an instant and job security is just a myth. It’s important to prioritise debt repayment and do not be content in only repaying the bare minimum.

Keeping up with the Joneses

The spirit is willing, but the flesh is weak. There’s no denying that despite all the good intentions in the world, paying down debt is hard.

It’s even harder to pay off debt when you’re trying to ‘keep up with the Joneses.’ Seeing everyone else around you living it up and spending big will make you feel as though you’re missing out.

In this social media age, it’s easy to get distracted by what other people are doing and compare yourself to them. It’s important to remember that all that glitters is not gold and things are not always what they seem.

Redirect your focus to the thing that is important to you – achieving debt freedom.

No Emergency Fund

Research by Hargreaves Lansdown found that 51% of UK adults do not have enough money saved for emergencies.

Rainy days will always come, they’re inevitable. If you don’t have a buffer in place to cover these expenses when they arise, it’s going to be hard to pay down debt as you’ll instead end up taking on more.

Build an emergency fund of £500 – £1,000 to begin with so that you start to develop the habit of bailing yourself out instead of using credit.

Photo by Towfiqu barbhuiya on Unsplash