Recent research by the Consumer Counseling Service has found that the average person contacting them with debt problems has a total of £22,476 worth of debt in credit cards, overdrafts, personal loans and other unsecured debts.
People are struggling more than ever to manage their money. Below, we have put together some useful tips to combat debt issues.
1. Seek Advice
There are many organisations out there that could help you manage your debt. You should not be alone when facing money troubles. With lenders chasing you for payments on a regular basis it can be extremely difficult to get out of debt completely. If you canít talk to a family member or friend, contact an organisation such as the National Foundation for Credit Counseling or the charity, National Debtline.
2. Evaluate the problem
Take the time to sit down and work out exactly how much you owe and the interest you will have to pay on top of it. The first step to tackling the issue is to determine precisely how much debt youíre in.
3. Set A Budget
In order to manage your spending on a day-day basis you need to set a budget and stick to it. This will help you track exactly where your money goes. Once you really start counting the pennies you will take note of what you spend the most on and how to cut back. Be honest about your spending habits and budget more than the minimum on credit card payments. Paying the minimum is better than nothing but interest is likely to creep up over time.
4. Priorities Bills
Pay the most pressing bills first and stagger out their pay dates if possible.
5. Donít Take on More Debt
If you are struggling financially it can be very tempting to take out a quick cash loan or borrow just a little to get you through the worst. However, the more you take on, the more you have to pay back. By adding to your debt pile you are only adding to your own stress and making the situation worse.
6. Avoid High interest Loans
Quick cash payday loans and other fast loans tend to have extremely high interest rates. In most cases you end up paying £25 out of every £100 you borrow.
7.Compare Debt Management Plans
If you do opt to go for a debt management plan, make sure that they are suited to your specific needs.
8. Pay Creditors on Time
It is vital that you try and keep your payments up on time otherwise you could wind up with additional fees and late charges. Fees and charges vary from bank to bank, however most charge a basic rate of £5 for going into an unauthorised overdraft.
9. Make a Goal
Set yourself a goal of when you wish to be debt free. This will help focus you and keep a positive attitude towards debt management.
10. Put Spare Cash Towards Debt Payment
If youíre lucky enough to come by any spare cash (either from a lottery win, prize, extra pay or bonus) put it towards paying off your existing debt.