Making improvements to your financial situation is a lot easier to do when you have a better understanding over it, an exemplary credit report and better knowledge of how to utilise options to escape a bad financial situation.

It can feel almost helpless when your situation is critical – having an adverse credit history, living off payday loans from one month to the next, then having to go to https://www.nationalpaydayrelief.com/payday-loan-consolidation/ because you’ve been unable to pay these loans back. All combined makes it impossible to make any savings and to attempt to rescue the situation.

Before you can start accumulating your wealth and increasing your financial status, you must determine the underlying problems first.

Be brave and make changes

First, stop heading to the coffee shop and getting a takeaway coffee or enjoying breakfast out. Yes, those Instagram influencers you follow do it, but that does not mean you must replicate their lifestyle. These (that may seem small) expenses are the first ones to remove when you are in a dire situation.

You cannot improve your finances whilst making small, unnecessary purchases on coffee and lifestyle. Try to think that anything that can be done the same and cheaper at home, then do it. Coffee, watching films, cooking meals will save you more than heading to coffee shops, cinemas and takeaways.

Review each pound that you spend, you will be surprised how much you will save by making these drastic changes for the non-essential items.

Prioritise which bills to repay first

Whilst it has always been tempting to not pay all of your bills and loan repayments on time, they ultimately must be paid. The key here is prioritising which bills and loan repayments must be made first.

Some regular monthly payments are vital, so they are the ones you must cover first. Think about your rent or mortgage, then utility bills to avoid being cut off. Other than utility, you will also have to consider regular maintenance of necessary home appliances and gadgets. For instance, you may have to consider AC Repair during summer; whereas, heating system or furnace upkeep for the winter to keep the home comfortable and warm. These are some of the essentials you will have to consider frequently when planning your budget.

Next, list all of the credit cards and loans you must repay and review them carefully. When you are looking to do is to find out which is the most expensive to maintain – not, which is the biggest or smallest credit amounts. Thus, examine the interest rate you pay, the principal loan amount, what are the late payment fees, and the repayment dates of each credit arrangement.

Then list the credit agreements with how to pay off the most expensive ones first, right down to the ones that have lower interest rates or offer payment breaks and more flexible payment options.

Consolidate your credit

When you have too many credit agreements to manage, consolidating them into one debt consolidation loan is an option worth considering. Not only does this make repaying your credits more manageable into one payment each month, it can also decrease the amount you pay in charges and interest.

Finding a small loan to cover several credit agreements is one way to release the burden of debt – however, don’t borrow more than you need and you will still need to keep your spending in check otherwise you will find yourself reaching for more loans to cover the cost of your new expenses and existing loan agreements.

Find alternative income

Once you have reduced your expenditure, re-structured your existing debt, next is to find alternative sources of income to advance your way out of debt. After all, you will only be able to reduce your expenses to a certain extent; you will need to improve your incomings to get out of debt.

An obvious way to do this is to ask for a pay rise – yet this is dependent on others actually giving it to you. Rather than relying on others, take control yourself and use the internet.

There are an endless array of possibilities to seize if you are serious about making extra money online. You can work on mini-projects through sites like Fiverr, Upwork or Freelancer. At first, you may find it unlikely that you will not earn much per gig, but you can work on several projects at once, during your off work hours, to increase your weekly or monthly income.

Popular online options are opening an online shop, offering services like digital marketing, photography or copywriting. You don’t need to set up a business per se with bank accounts. Use a PayPal account to get paid into.

Don’t deviate

Escaping a bad financial situation requires the strictest discipline. It can become very demotivating, always reducing expenses and working several jobs simultaneously. Keeping with this, and keeping up to date on your debt repayments will help in the long-term.Once your loan is repaid, you can allocate more money towards the remaining outstanding credit agreements, meaning you can repay your credit in your priority list faster, and then assign the extra money to the next costliest expense and so on.

Keep to this, and you will advance to the ideal starting point, where you are earning sufficient income with little credit to repay, and then you can set yourself some different financial goals.

David Bailey-Lauring is a single father of three boys so he knows what it takes to stretch a budget when it comes to family finances! David is a small business entrepreneur and regularly writes about entrepreneurship, tech, sports and personal finance in the UK, USA, and Europe.