Debt can be a huge drain, both financially and emotionally, so clearing your outstanding debts should be a priority.
By paying down any sums you owe, you’ll be in a much stronger position to save up for those things that matter to you, from holidays abroad to a larger property.
According to a survey by HSBC, clearing debt is the main long-term financial goal among people in the UK, ahead of saving up for big purchases, taking early retirement, paying off the mortgage and saving for a property. However, just half of those polled said they know how much interest they’re paying on their current debts, which means many could be paying more than they need to in repayments by failing to pay off high-interest debts first. Similarly, only 11 per cent were found to have combined their debts into one place to make them easier to manage.
The peace of mind that comes with paying down debt can’t be understated, as the constant worry about minimum payments and deadlines can take a huge toll on your mental health. When that worry is taken out of the picture, you can feel a tangible sense of control over your finances and security about your future. You also won’t have a sense of panic if anything unexpected happens, as you can build a cash reserve in case you’re hit with sudden expenses, such as a leak in the roof or replacing a damaged appliance.
This sense of freedom can help you take a look at the bigger picture and focus on achieving your larger ambitions. From booking a luxury holiday to setting up a business or saving for your retirement, these goals are far more doable and realistic if you’re not battling monthly debt repayments at the same time.
According to the HSBC study, six in ten people are confident in their financial resilience and feel able to handle surprise expenses over the coming year. Furthermore, over half said they feel confident they’re in a position to achieve their financial goals for the next 12 months. But with so many failing to take steps to pay down their debts, you have to wonder whether some of this confidence could be misplaced.
If you’re struggling with your debts, the best course of action is undoubtedly to speak to a qualified financial planner. A professional specialist can help you make the right financial decisions, so you can be sure that your money is working hard for you and that you’re on course to achieve your objectives.
Please get in touch with our friendly team of specialists and we’ll be happy to point you in the right direction, so you can get the reassurance and confidence you need.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain. Ethical Futures llp is authorised and regulated by the Financial Conduct Authority.