It’s so easy to get into debt these days – it’s frightening.
Figures announced in May (www.themoneycharity.org.uk) show that the average total debt per household in the UK, including mortgages, was £59,713, while people as a whole in the UK owed £1,637 billion at the end of April.
Most people experience problem debts at some point in their lives, and it can be difficult to get the situation back under control if you don’t get a handle on it.
But there are ways of cutting back to get your debt under control.
Here are thirteen tips from www.gethelpwithdebt.co.uk to get yourself out of debt.
1 Consolidate and transfer your debts
Taking out yet another loan to deal with your debts might not seem like the best idea in the world, but by consolidating all your debts to a single credit card or other loan may be precisely what you need, provided that you do so responsibly.
If you have a decent credit score, you should be able to sign up for a credit card that offers 0% interest on balance transfers.
This way, you won’t have to pay any interest on your debts for a period of time, provided that you pay everything off within the given timeframe. But you will be charged a fee to do this and if you don’t pay off your debts within the 0% period, the total amount you owe will increase.
If you are looking for free advice call 02890 393626 to speak to one of our advisors.
2 Cancel your credit cards
As soon as you have consolidated and transferred all of your debts onto a balance transfer credit card, it is a good idea to cancel any other credit cards that you have.
By getting rid of your credit cards, it should be easier to avoid spending in the future, and you’ll likely save on interest fees as well.
A credit card can be financially beneficial if used correctly, but if used irresponsibly your debts could spiral out of control.
3 Resist impulse buying
Impulse buying is the enemy – don’t ever forget that! You should take impulse buying into account when you start your saving strategy.
If you see something that you want, determine whether your budget allows it, and start saving as required.
Most importantly, avoid buying anything on credit, even if it is interest-free for a given amount of time.
4 Make sure you have a spending plan
Having a spending plan isn’t quite the same thing as budgeting, and you can usually provide yourself with a modest reward each month when you stick to the plan.
Everyone’s spending plan will differ, but the first thing you have do is to know your disposable income that you have left over after your monthly expenses and setting some of it aside for later.
5 Prioritise your debts
Some people increase all their minimum payments by just a little bit, but that way your payments only drop by a small amount each month. You can make more noticeable progress by making a making a big payment to just one of your accounts each month until that debt is completely repaid.
In the meantime, make the minimum on all your other accounts. Then do the same for another debt, and another until they’re all paid off.
6 Have an emergency fund
Your debt can quickly spiral out of control to the point that there’s no more money available left to borrow when it comes to paying an unforeseen bill.
Whether it’s an emergency repair for your home or car, a parking fine or anything else, we recommend you have some money saved up to bail you out of what can quickly become a disastrous situation.
However, instead of relying on a credit card or bank account overdraft, start saving up right away in preparation for that rainy day.
7 Seek out a debt management plan
In severe cases, you may need to turn to a formal debt management plan. Debt management plans are typically negotiated by a third party.
You can only opt for a debt management plan for debts that are not secured against property.
A debt management plan is an agreement between a debtor and a creditor that addresses the terms of an outstanding debt.
DMP help reduce outstanding, unsecured debts over time to help the debtor regain control of their finances. The process can secure a lower overall interest rate, longer repayment terms, or an overall reduction in the debt itself.
Consider an IVA
An Individual Voluntary Arrangement (or IVA), is a fixed term form of debt help, consisting of a repayment plan, allowing those with serious debt problems the opportunity to settle the outstanding balances to their creditors.
IVAs are available to all people who live in Northern Ireland, England or Wales, who are insolvent and are seeking to protect themselves and their assets from the threat of legal action and bankruptcy.
Once an IVA has been approved by creditors they are legally obligated to cease all legal action and freeze all interest or late payment charges.
With a predetermined ‘fixed’ repayment period (usually 60 months), an IVA enables the applicant to make payments based on affordability rather than their contractual obligations. However if you have access to third party funds, an IVA can be completed within six months.
On successful completion of the IVA, the creditors are legally obliged to write-off any outstanding debt, leaving the applicant completely free of all the debts included in the IVA.
If you are looking for free advice on an IVA contact one of our advisors on 02890 393626.
9 Cut your outgoings
A few small changes can make a big change to your monthly outgoings.
There are many small ways to save money, but some of the most effective include turning down your thermostat, upgrading to energy-efficient light bulbs and appliances and not leaving things on standby.
Also shop around for a better deal on your utility bills, internet and phone connection and mobile service provider.
10 Take on some extra work
Increasing your income could be worth looking into. Even a very modest increase in your income might help.
If doing a few extra hours in your day job isn’t an option, you could consider a part-time weekend or evening job. If this is done over a short-term period it could be a quick way to pay off your debts.
11 Positive attitude
If you’ve been saving for a while and it feels like you’re not making much headway. Don’t panic!! If you’ve settled into a regular saving habit, you’re doing a great job, but you have to stick at it.
It’s about sticking to it consistently without losing focus on the financial targets you have set yourself.
12 Change your mindset
Don’t feel like you’re being deprived but be proud of what you’re accomplishing and keep building long term and keep setting small goals that you can hit.
Replace the feeling of ‘missing out’ with the ‘opportunity to save’. Try to focus on how far you’ve come and not how far you have to go.
13 Boosting your credit score
Don’t forget to continue checking your credit score and keeping an eye on where you can improve your score.
Remember that regular credit payments that will help build good credit when it comes to getting a mortgage. So use it to build your credit rating, but try to have paid it off six months before you intend to apply for a mortgage.
But if your debt worry is too much and you are looking for an urgent solution to your debt crisis, Get Help With Debt (part of the CD Fairfield Capital Group) operates under the regulatory framework of the Financial Conduct Authority and the Chartered Accountants Regulatory Board which offers you the highest degree of protection and peace of mind.
Every client receives a bespoke, personally tailored service and proposal that meets their specific needs. It also meets the criteria of their lender.
We have developed a strong insight and relationships with all the main UK lenders, due to our transparency and consistent approach.
We offer a range of services that have a track record of successful outcomes that is unmatched in our sector.