The party is over here come the bills

Experts estimate more than £11 billion was put on plastic in the run-up to Christmas and during the January sales.

That’s enough debt to be getting on with. However MoneyExpert.com research shows around 4.2 million of us are still paying for Christmas 2005. In fact the average time it takes to clear our festive debts is more than two-and-half months.

It’s no surprise that January is officially reckoned to be the most depressing month, according to researchers, with January 22nd the most depressing day of the year.

That’s when the credit card bills from the festive excess start hitting doormats across the country and people have to begin tackling their finances.

It’s no fun when reality bites and you could be forgiven for burying your head in the sand and hoping for the best. You’ll also have seen the Bank of England putting up interest rates – since August 2006 they’ve been increased three times by a total of 0.75 per cent adding around £48 a month to the cost of the typical mortgage.

We can help you break the cycle of debt and sort out your finances so you can work towards becoming debt-free and boost your wealth into the bargain.

Taking control of your debts

It is easy to let your finances spiral out of control and it can be hard to keep track of all your borrowings.

Typically you might have run up an overdraft on your bank account while also having a balance on your credit card and perhaps also owe some money on a store card. Some of us will have personal loans and many of us will also have mortgages on our homes.

The issue is that each source of debt will charge a different rate of interest. An average authorised overdraft will cost you around 12 per cent while the credit card will cost around 15.9 per cent if you’re not on a special deal.

The store card could cost a massive 29.9 per cent while the personal loan will be around seven or eight per cent. And then there’s the mortgage.

That will leave you juggling repayments to a number of lenders and having to judge how much to pay each one each month. Of course you have to keep up repayments but it can be tempting to cut back on one and only make minimum repayments. But that will mean the debt mounting as more interest is added.

Cutting through the debt chains

Consolidating your debts into one loan can help you to cut monthly repayments and boost your wealth while also giving you a better chance of becoming debt free.

You can take out one loan to repay all your creditors and then concentrate on repaying that loan. This is known as a consolidation loan.

The aim should be to secure the lowest rate possible for your consolidation loan. That can mean you making lower repayments every month as you’ll cut out the expensive debts and have everything in one place.

You should also have only one payment a month and will be able to keep track of your debt.
Click on MoneyExpert.com’s Debt Consolidation calculator to see what you can save.

Finding a consolidation loan

Banks and building societies plus other finance firms offer personal loans for up to £25,000 which you can repay over periods as long as seven years. Rates range from around six per cent.

You can consider extending your mortgage and should contact your lender to see what they can offer.

Alternatively you can look for a secured loan which is secured against your house. This can be paid off over a longer period and you can borrow higher amounts.

We can show you the best deals and also give ensure you are only put in touch with firms which are likely to lend to you.

You should wherever possible look to pay your debts off as quickly as you can. The longer you borrow money for the more interest you will pay.

And remember it’s not an excuse

Consolidating your debt will give you peace of mind and should boost your wealth by cutting monthly payments. However it shouldn’t be an excuse to start borrowing more.

When you consolidate your debts it should be the beginning of the end of running up debts and allowing your finances to run out of control. You should not keep on consolidating and consolidating. It’s time to break the cycle and become debt free.

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