4 Steps to a Debt Free 2021

4 Steps to a Debt Free 2021

Daniel Hall 09/01/2021 1
4 Steps to a Debt Free 2021

2020 was a difficult year for so many of us financially.

The impact of the CoronaVirus Pandemic on people’s jobs and finances was unprecedented and left many people in dire straits. With the first rollout of the new vaccines in countries across the world, however, 2021 is shaping up to be a better year for us all. While the ultimate finish line of the pandemic is still some months away, the global economic recovery has already started, and so it is time to start planning our own personal financial recoveries. Many of us have understandably racked up some debt over the last year and are now looking at the best solutions for paying that debt off.

To help everyone start the new year off with a clean slate, here are 4 steps to a debt-free 2021.

Write off Your Debts With an IVA

1. Write off Your Debts With an IVA

One of the best ways you can write off your debts if you live in the UK is through an individual voluntary arrangement (IVA). With an IVA, you make an agreement with your creditors to pay back a set sum every month for the duration of five years. Any money which is still owed when that five-year period is expired is automatically written off. The process is relatively straightforward but it is still worth getting expert advice such as https://www.jubilee2000uk.org/iva/a-guide-to-ivas-or-individual-voluntary-arrangements-in-the-uk.html to ensure everything goes smoothly. An IVA is a good arrangement for both parties as it ensures that your creditors get back at least some of the money which you owe them, and it helps you to write off some of the mounting debts caused by high-interest rates. An IVA can help you write-off as much as 80% of what you owe so it is a great solution to begin 2021.

2. Write a Detailed Budget 

Many people who end up in debt actually have enough monthly income to comfortably cover their outgoings. Where they fail is that they don’t budget accordingly and so they end up overspending making impulse purchases or not staying within their means. Always write a detailed monthly budget, breaking it down into big expenditures such as rent, car payments, and utilities, and try to put some aside for savings or emergency funds. This is very important as it can help you to prepare for a rainy day or provide the money to treat yourself at the end of the month or year. It is really surprising how far your money can stretch when you take the time to lay it out at the start of the month. Nothing is too small to make it onto your budget, and the more detailed the budget is, the more savings you can make.

3. Pay For Things In Full

One way in which people fall into debt is by buying things and paying for them later or in monthly installments. Often when you buy something with monthly payments, extra interest is added which ends up making the item significantly more expensive than it originally was. Similarly, if you get something on a buy now, pay later deal, you may not budget for it and so when it comes to paying you will be taken by surprise. Make it a new year’s resolution to pay for everything upfront so that you don’t end up being hit with extra interest or unforeseen costs. If you can’t afford something at that moment and it isn’t an emergency, save up for a couple of months and pay for it then.

4. Take Advantage of the Last Months of Lockdown

While the Covid-19 lockdown has very few positives to speak of, if you are fortunate enough to have kept your job and are working from home, the lockdown is a great opportunity to save some money. When you are planning your monthly budget, you can completely cut the sections for transport, eating out, and everything else which you are not allowed to do under your local lockdown rules. In many countries, national lockdowns are likely to last a few more months, so use them to pay off your debt so you can start with a clean slate when the pandemic is over.

Take Advantage of the Last Months of Lockdown

With 2020 now behind us, we are all hoping that 2021 will be a better year. Financial difficulties can cause a lot of pressure in our lives, and mounting debts can be a particularly heavy burden. While it may seem unachievable now, implementing a few simple changes can really make a huge difference in clearing your debts. Take advantage of an IVA and then make the lifestyle changes in this guide which will ensure you remain debt free for years to come.

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  • Scott Andrews

    Good article

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Daniel Hall

Business Expert

Daniel Hall is an experienced digital marketer, author and world traveller. He spends a lot of his free time flipping through books and learning about a plethora of topics.


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