If you are struggling with debt, you are not alone. Debt affects a large percentage of those living in the UK, with 8.2 million people estimated to be suffering with problem debt. This amounts to 16.1% of the population and suggests that debt and financial worry is felt amongst many up and down the country.
Read on to discover what you can do to help your financial situation to ensure some stability and ease worry on a day-to-day basis:
- Get some advice
Whether you know a friend or family member who has been through a similar ordeal, or you turn to free and impartial advice from a debt management company such as PayPlan (or a similar debt advisor), talking about things can relieve a lot of stress and give you a clear path to tackling your debts. Just remember that debt advice should be free, impartial and everything you say should be treated with complete confidence.
- Assess your debt
It’s very important that you closely inspect your debts: what you owe, who you owe money to and when you started making repayments. Start by listing your debts (which includes your mortgage if necessary), plus any consumer credit you have outstanding, such as credit cards, payday loans or car finance arrangements.
Once you understand what debts you have outstanding it is time to check the balances on them, taking a careful look at what has been paid already and what you continue to owe. All of this information can be found on your credit report if you are dealing with defaults. Alternatively, your creditors should be sending statements to keep you updated.
- Assess your income and expenditure
Once you fully understand what you are paying back and how much is still owed, it’s time to take a close look at your personal bank account. Look at your income and expenditure, calculating how much is left over after the important bills come out and some money has been put aside for everyday expenses such as food and petrol. Then subtract the repayments. This will leave you with a leftover amount, or it could indicate that you need to reassess your financial situation.
- Seek out a debt solution
If you are struggling to make monthly repayments or have very little leftover, it’s time to seek a debt solution. There are various solutions available – some will help you by freezing interest rates allowing you to repay your debts faster, some involve paying one singular payment each month to your creditors, based on what you can afford. If you are in debt, it is important to know that there is help available. Some debt solutions, such as IVAs, however have specific criteria so if you are worried about your finances and looking for further support, it is recommended you seek advice from an expert. They will talk you through your options.
- Budget now and in the future
Now that you have a solution in place, it’s time to take a closer look at how your money is being spent. It’s time to cut back, remove any unnecessary luxuries from your everyday spending and set a strict budget to live by. This means making small changes such as cancelling subscription services or swapping branded to own brand when in the supermarket, for instance.
These five tips will help you on the road to recovery and taking back control of your debts.