Dealing with Debt

Dealing with Debt

Debt is one scary thing but do not fret as no debt is unsolvable.

There may not be a quick fix, it may not be immediate and it will be tricky, but with persistence and dedication, you can clear your debt and start a fresh.

It can be so easy to put your debt to one side but the longer you don’t deal with your debt head on then the worse it can get. From the growing worry you will experience to the increased interest, the longer your debt weighs you down, the more trouble you will face.

There are a number of stages which will help those with debt overcome this and move forward;

Step 1 – Facing your Problems

Admitting you’re in debt is the first and most significant step in dealing with the problem.

Go through old bills, open the final warning letters you’ve been ignoring and admit to the scale of your debt. Create a finance sheet of all your incomings, outgoings and debt and how you plan to pay them off without creating further problems.

Step 2 – Do the Maths

The next step is all about working out realistically what you can afford to pay back and in what timescale.

The Financial Services Authority’s online budget calculator will allow you to input all of your monthly incomings and outgoings such as rent, bills etc and budgeting around what you can afford to give back what you owe.

This may be a lengthy process but this important thing is that you are making the steps and each month your debt will decrease.

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Step 3 – Switch Cards

You’ll often see them advertised but switching your bank to one with a 0% on transfers could be perfect for you and may decrease your interest rate, giving you time to pay off your credit card debt without the added pressure of time.

It is worth having a look online and also going into your own bank branch to see what they can offer you.

Just be cautious that the 0% will only be for a certain amount of time and to keep on the good side of it, you should aim to have your debt paid off by then.

Step 4 – Snowball

The term snowballing your debts is a technique some find works or them and their debt situation.

Snowballing is when you focus all of your efforts on paying off one debt all whilst making the minimum repayments on other debts you have. This allows you to get rid of one quicker before moving onto the next, if you have a number of debts then paying them all off equally may extend the time you have the debt.

This does work for some more than others to assess your debt situation before taking this route.

Step 5 – Keep up with Payments

When you have worked out how much you can replay and within a certain time period – make sure you pay it back on time. If your situation or income changes then you need to get in touch with the company you are making payments to so as they can alter your repayments and period so you don’t fall short and end up with more interest.

Step 6 – Seek Advice

If you are unsure of how to tackle your debts or are worried that the situation is increasingly worsening, then you need to speak to a professional.

Dealing with debt is no easy journey and as soon as you find yourself struggling, then you should seek advice. Never be tempted into taking a payday loan to cover costs – these loans come with extremely high interest rates which will spiral and worsen your situation.

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