Ten Ways Creative's Can Get Debt-Free & Financially Secure

Being a freelancer or creative can be expensive (due to buying domains, software, design tools, etc) and even troubling at times. Whether waiting for your next big contract or sadly going through redundancy from that dream job. There might come a time when you need to use those credit cards to survive. But once you are finally out of the turbulent water, how do you get financially secure again? And why should you take my advice anyway?

By my mid-20's I was several grand in debt. I finished university and maxed out a few credit cards, allowing me to move to London, where I would pursue a career as a designer. After hours of working overtime, freelancing in my spare time, reading books, reviewing my finances, and commuting three hours daily, all to clear those credit cards and live more freely. During that time I learned a few rules for getting out of debt fast. Here are my top ten tips.

1: Write down everything you spend money on or get an app to do it

It might not sound glamorous and time-consuming, but writing all your purchases down in one place helps you understand where your money is going. Luckily, we live in the modern era, where dozens of apps and banks can track your spending. But I feel to become more conscious of your money, you need to do the heavy lifting yourself. It helps you question yourself about every penny you spend and allows you to spot the spending habits that no longer serve you. You don't have to do this for the rest of your life, but keeping an Excel sheet for 30 days or a week every month can help you get back on track to financial freedom.

2: Write down all of your debt

Whether you write down all your debts in the same spreadsheet as your spending habits or on a little sticky note. But just like tip one, writing down your finances is very useful for getting debt-free. Often or not, we can easily have a couple of credit cards, overdrafts, loans, and mortgages. It can start to feel overwhelming, so we ignore our debts by not learning how much we owe. But once you see the whole amount, it can give you a goal to start focusing on achieving and a feeling of relief when the figure goes down each month. Also, if you sign up for Money Supermarket Credit Monitor, it has a tool that shows you all your debts in one place.

3: Know what debts to clear first

Always start by clearing the debts with the highest interest rate first, then move to the debt with the second highest interest rate. So, if your credit card has a 21% APR but your overdraft has a 0% interest, pay off the credit card first. This will prevent it from snowballing and building up more debt quickly. If your credit cards have the same interest rate, pay off the credit card with the oldest debt in case you have gone past any offer rates. If this isn't the case, pay the lowest amount to clear the card. And make sure you never miss a payment.

4: Limit your gadgets

It can be tempting to want to have the phone with the best camera, the newest iMac, the best software, the smoothest tablet, and the sleekest screen. Especially when working as creatives, we want to impress our clients with the highest tech. As if it is what makes us great at our jobs, but it's not always true. Always ask yourself if you really need the purchase before waiting a month (if you can wait e.g. not replacing a broken iMac). After the month, if you still want it and can afford it, then buy it. Sometimes the time makes us realise how we didn't need it. Also, always look for second-hand equipment or luxuries, but remember you can't always claim these back on HMRC.

5: Pay yourself first

We often hear that you should pay yourself first before anyone else. A good starting point is that 10–20% of what you earn each month should go into your savings account. Often people get overwhelmed by their debt and focus on clearing it rather than saving. So, instead of putting 10-20% into your savings, split that into your debts with a little for your savings account. Once your debt is cleared, your already in the habit of using that 10-20%, which you then use to get that emergency fund into a good place. Or start putting extra towards your pension.

6: Set up Direct Debits

As freelancers, creatives or even full-time employees, we can easily become too busy to remember when payments are due or that we should transfer 20% into our savings pot. But simplifying setting up a few direct debits for the first day of each month or after paying day for your utilities, phone, rent, savings, and other necessities. Which will help take the financial worry away from you and one less thing to worry about. Also, it's a good habit to set up two accounts, one for bills and one for spending.

7: Set a Budget and Stick to it

We can’t always see what is on the horizon, but creating a budget and sticking to it can prepare you for those rainy days when fewer finances are coming in. If you had taken the tip early of writing down when you spend money, you should have started gaining an idea of where your money is going. Use this to help create a budget that works for you. Or even get a bank account that updates you on where your money is going. Monzo bank accounts can inform you if you spend £250 on groceries every month, allowing you to now know that you need £250 free each month for your food shop.

8: Invest in yourself

Invest in yourself through education, books, YouTube tutorials, podcasts and online courses. Libraries are free and can provide plenty of learning resources from books such as ‘Rich Dad, Poor Dad’ or ‘I will teach you to be rich’. Or watch one of the many YouTube videos to help you advance a skill. Investing does not always have to be about stock markets, bonds and real estate. While these areas can put your money to work, focusing on investing in yourself while getting out of debt is more important. At the end of the day, money can come and go, but knowledge will always be with you.

9: Hustle

Classic advice for freelancers and creatives alike is to hustle. Use your skills to write for blogs, design logos for restaurants, consult marketing teams, and even find take-on short-term gigs such as handing out flyers during match days or offering free drink samples around big cities. There are always short-term gigs out there if you're really stuck for cash. The sad reality is clearing debt fast takes a lot of hard work, and finance companies sell you an easy solution of 'free' money to have you trapped in their system for years. Learning new methods to create income outside of your full-time job or regular clients can get you one step closer to financial freedom faster. Hustle as much as you can in your busy life without breaking yourself, and once the debt is clear, you can finally relax.

10: Don’t have an instant withdrawal savings account

Open a savings account that does not allow instant money withdrawals, leading to a bad habit of you dipping into your account at the end of each month to buy things. By simply switching to an ISA that does not dispense your money until 5 pm the next day, you will become more conscious of your spending. This will make you think twice about whether you need that money. A better option to a generic ISA is a lifetime ISA. You won't be able to withdraw from it unless you buy a house or are at retirement age, but the government can add up to 25% off what you deposit. Who doesn't love free money?

Bonus Tip — Be patient

It might take you years to clear your debts and become financially secure. I wish I could say that it will be a fast path or that it will be easy to get out of debt, but that's not always the case. I also wish I could tell you once you become debt-free, you will never have to resort to using credit cards again, but sometimes life throws things our way that we aren't prepared for. All you have to remember is everything in life takes time. It's okay to have setbacks and to keep striving forward, never giving up.

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For more tips, tricks and advice on surviving the world as a creative freelancer visit JamesNealeCreative.com