Five ways to help you stay out of debt in 2021

Sort out your finances with a short term personal loan from Simple Fast Loans


Well what a year 2020 has been! The Covid-19 pandemic has affected our lives in many different ways this year. One of these is financially. 

Many people have either been furloughed, have had their hours reduced, or have sadly lost their jobs during the course of the pandemic. With Christmas on top of all of this, money is very tight and you may well be sliding into debt.

But Christmas and New Year are always an opportunity to reflect on the previous year and start to think about the year ahead. Let’s hope that 2021 is a much better year for us all in every way. But will you really be able to get on top of your finances this coming year? Are there things that you can do, or is everything completely out of your control?

Let’s take a look at five steps that you can take to start getting your finances under control and ensure that you stay out of debt in 2021.

1. Face up to your financial position

Many of us are scared about anything to do with money. We feel as if we don’t really know what we’re doing and just keep messing things up. We are scared to ask for help in case other people judge us. We feel ashamed.

But to get on top of your finances you need to look things square in the face. So take a deep breath and make a start right now. That can often be the hardest part.

The first thing to do is to make two lists:

  • Debts: everything you need to repay eg loans, overdrafts and credit cards
  • Assets: all the money you have, for example savings, investments and gifts. 

This will help you to understand exactly where you stand financially so that you can then begin to move forward by following steps 2-5 below. 

But if  you feel completely overwhelmed by your situation, then do bear in mind that there are external agencies who may be able to offer some expert advice to help you. Some of these are:


They will provide impartial, non-judgemental advice about various ways that you may be able to spread or defer your debts so that you are more able to start repaying them.


2. Start attacking your debts

Now that you know where you stand, the next thing to do is to pay off as much of your debts as possible if you are able to do so. If you have any savings then it probably makes financial sense to use some of them to get rid of some of your debts. This can be a tough decision, particularly if you have been saving for something special. But it may be better in the long run to get out of debt first and then begin to start saving again.

You may want to focus on getting rid of one debt at a time, paying as much off as quickly as you can. Then, when that is paid off, put all the money you were regularly paying into that debt into the next one, and so on. It can be very motivating to see a debt completely cleared rather than just chipping away at several debts all at the same time.

However, it is really important that you continue to make regular payments into all your debts, otherwise this could affect your credit rating. 

If you have several debts and you find that you are losing track of what to pay and when, another option to consider would be taking out a debt consolidation loan. A short term personal loan could enable you to pay off all your existing debts and be left with just one monthly repayment to make. You can then put all your efforts into clearing this one debt and will be motivated by seeing it reduce further and further until it is completely paid off. 

It is not easy to face up to debt, but if you are determined, and work hard to pay off your debts, you can get back on your financial feet again. It can be helpful to see your debts as a challenge to be overcome, rather than an insurmountable situation. Try to find as many ways as possible to increase your income so that you have more money to pay off your debts. 

Some of these ways could include:

  • Looking for a new job that pays more;
  • Taking on a second job, such as an evening job or something home-based/online; 
  • Selling goods that you no longer need;
  • Selling your car and using public transport for now;
  • Taking in a lodger;
  • Moving to a smaller home;
  • Renting out your home and moving temporarily back in with family.

Some of these ideas are quite uncomfortable to think about, but a short term sacrifice could be worth it if it gets your debts sorted out once and for all.


3. Stop overspending

When you are putting effort into paying off debt, it’s really important to make sure that it doesn’t get any worse. So as well as finding as many ways as possible to pour money into your debts, you also need to be really strict about not overspending.

So right from the start of January 2021, be determined to call a halt to all spending apart from the absolute day to day essentials. Also make it a resolution not to use credit cards at all this year unless it is a genuine emergency.

Try these five tips to cut down on your spending:

  • Check every bill to make sure it is still relevant. It is easy to keep paying for things you are not using. So cancel anything you are paying for but don’t use. 
  • Make sure you are getting the best deals from all your suppliers: energy companies, TV and broadband, mobile phone. Comparison websites such as Money Supermarket can help you to do this.
  • Plan food shopping carefully. Shop around for good deals, and make sure that you use everything you buy so that waste is cut to a minimum.
  • Cut out any expenditure that is not absolutely essential. Whether this is socialising, clothes shopping, cosmetics or hairdressers; do everything you can to spend less money.
  • Walk wherever possible rather than using the car or public transport. Every little helps.

Also check out our recent article How to Save Money as a Family for more money saving ideas.


4. Prepare a budget and stick to it

If you have got this far, you are doing very well. But you need to make sure that you can manage your money on a month to month basis, and don’t get further into debt without realising what is happening.

So it’s a good idea to create and stick to a realistic monthly budget. You can start this by making a list of all your regular payments, for example mortgage/rent, loan/card repayments, household bills, subscriptions etc. Where possible set up direct debits for these payments so that you know when they will be paid. Then add to your list all other essential spending such as food, childcare, transport etc. 

You also need a list of all the money coming into the household, for example salary or wages, tips, bonuses, benefits, plus any regular help from family or other sources.

Budgets can look fine on paper but you also need to check your spending as it’s very easy to underestimate this. So try recording all your daily expenditure for a couple of months either in a notebook or a phone app. You will then be able to see clearly what is going where. 

Once you have a realistic idea of where your money is actually going you may well find that the numbers don’t add up. If you don’t have enough money coming in to pay for everything going out, it explains why you just seem to get further into debt each month. 

But at least you know. So what you then need to do is go back to steps 2 and 3, and either increase your income or reduce your spending further. Or both. It is not easy, but putting in the effort now will reap welcome rewards later on.


5. Don’t give up

Just as we explained in step 4 that you might need to go back to steps 2 and 3, getting to grips with debts needs to be an ongoing process. It will take a lot of time and effort to get things sorted, but it can be done. You may need to keep going through these steps several times to really make it work. The thing to do is to keep at it. Don’t give up!

Paying off debt is a little bit like losing weight. When things get tough, it is much easier to give up than to keep going. But if you do keep going you will see amazing results. 

So if you have a bad day, and either overspend or forget to make a payment, put it behind you and keep moving forward. Tomorrow is another day. Don’t open the door to your old bad habits but keep persevering with your new good ones instead.

If you reconcile yourself to being in this new financial way of life for the long haul, your financial situation will gradually improve dramatically. Things will get easier as debts get paid off and you have more money to spare. But always aim to be careful with your money from this point forward, so that you not only get out of debt, but stay out.


We hope that the above tips help you and your family to stay out of debt in 2021. 

If you do need a short term personal loan to help you consolidate your existing debts into one manageable payment then do get in touch with us at Simple Fast Loans, and we will see what we can do to help.

All the very best for 2021, and remember to check back here soon for more financial and lifestyle tips from Simple Fast Loans.