You Can Get Out Of This Black Hole

With the cost of living crisis the UK, but also the world, is engulfed in there is an increasing trend whereby households are going into debt purely to afford the essentials

May 18, 2025

Dear Fellow Financial Freedom Seeker, 

With the cost of living crisis the UK, but also the world, is engulfed in there is an increasing trend whereby households are going into debt purely to afford the essentials which means debt levels are gradually increasing.

The reason lenders give people debt is because they make returns on this through interest payments. 

Interest rates can be high especially for personal loans, or they can be low like for mortgages - note that while mortgage rates are higher than recent history, they're still relatively low compared to other types of debt.  

This means people can end up in a cycle whereby the need to pay interest that can’t be afforded means people get deeper and deeper into debt. 

But you can combat this and get out of your debt worries! 

Your One Simple Step this week is to 

Make An Extra Debt Payment So You’re Overpaying It

Overpaying debt enables you to reduce it more quickly and also save on interest payments. 

This calculator whilst advertised as being for mortgages can help you calculate how much time and money you’d save overpaying a debt. 

There are different methods for overpaying debt - the snowball method or the avalanche method. Which one you should use depends on what debts and amounts of debts you have but also your psychology. 

What this to help you decide which debt repayment method to use. 

How have you managed to repay your debts? 

Til next week, 

Pernia | Your Finance Travel Buddy