By the time most people realise or are prepared to admit that they actually have a debt problem, it’s already at a level where it is affecting their daily lives in a range of ways. The reaction that most people have to debt problems is to go for short-term fixes – taking out more credit, extending overdrafts or even taking out loans – all of which only makes the problem worse. Taking on more debt to solve an existing debt problem is often a downward spiral of serious debt issues that can quickly get out of control.
The worst thing that you can do is just hope that your problem will go away. Don’t let debt overwhelm you and don’t let the thought of asking for help embarrass you or put you off. Seek help as early as possible and before you know it you’ll be on your way to resolving the problem and improving your financial situation.
The Spending plan
If you have debt problems, then making a budget is key. This will give you a handle on what you spend to futureproof your finances. Slim down your expenses or even cutting certain things out will greatly help your financial situation in the long term.
Debt Management Plan (DMP)
If you are struggling to manage your debts by yourself then using a DMP could be a better strategy. A DMP is an affordable repayment programme set up and managed by the company who set up a DMP. They will help you work out what you can afford to pay each month and then help organise the payments. Allowing you to pay your debts in a single, affordable installment.
If you fall behind on repayments, it’s important to remember that some debts are more important than others, such as secured loans and rent. If you have loans or owe money on credit cards, it makes sense to pay off the debt that charges the highest rate of interest first – it’s the fastest way to clear your debts. Not paying priority debts or priority bills can lead to serious consequences for you and your family. If you have problems paying for these priority levels, seek debt advice immediately.
Increase your income
Everyone’s circumstances are different, but if it is possible, think about ways to increase your income. You might have fallen into debt due to a low income, and having another stream of income could really help you out. This could help get your finances into better shape and pay off debt faster. Whether it is having a side hustle or asking your boss for extra hours, it’s all worth it to be debt free.
It is hard to stick to your budget and watch what you spend on a daily basis, especially in times of sales, such as the recent Black Friday and the upcoming Christmas season. But living in debt is a lot harder when you get rejected from everything including taking out a phone contract. It is really worth the wait of not being in debt.