Debt doesn’t discriminate, it can affect old and young, rich and poor. It’s something that many of us will deal with at some point in our lives to some degree. If you’re currently in the grasps of debt, chances are you’re feeling a little hopeless and would do anything for a fresh start. While it takes a lot of work and effort there is light at the end of the tunnel. Here are some of the was you can get out of your financial fiasco and deal with debt.
Utilise Any Savings
Having savings is important, however, if you have savings and debts at the same time then this doesn’t make financial sense. Because interest is accrued on debt, it costs you money to keep balances rolling over every month. You’re much better off using any savings to pay debts, and then start saving again once you’re debt free. As well as utilising any cash you have to pay debts, think of things you could sell too. Old technology, CDs, DVDs, games, jewellery you don’t wear. These can all raise funds which can go towards your goal of being debt free. There are companies out there who specialise in buying these things, take Music Magpie for example. Otherwise apps like Depop can be used for selling clothes, Gumtree and Facebook groups can help you to sell things locally,
Speak To Your Creditors
If you’ve already done the above and still have remaining debt, or simply don’t have anything to sell then your next step is to speak to your creditors. This can seem scary, but actually, these companies are often happy to help and do understand the financial issues people can have. Talk to them, let them know the situation, and you can both come to a repayment arrangement that suits you. It might be tempting to ask for the smallest amount possible, but actually paying as much as you can will bring down the debts more quickly and they will be out of your way then. Either way, work out what you can afford and speak to whoever it is you owe the money to see if they will accept your offer.
Speak to a Debt Management Plan
If you have a lot of debts and it’s time-consuming and confusing going through them all, or you just don’t like dealing with creditors directly then speaking to a debt management company could be an option. While you will pay a fee for this service, the company will act on your behalf and liaise with your creditors, work to get interest frozen and generally deal with things for you. Best of all, instead of making lots of payments each month to separate creditors you just make the one payment to them who distribute it for you. This can simplify your finances and take a weight off your shoulders. If you don’t have the means to pay for this kind of service, your other options would be to speak to a charity like Stepchange who can help walk you through what you need to do. In some cases, a bankruptcy or IVA might make the most sense, although these should be used as a last resort.
Build a Brighter Future
Once you do manage to become debt free, it’s time to build a brighter financial future. Start putting savings away for a rainy day and create a buffer in case you’re hit with an unexpected bill. If you manage to save past your buffer, you could start saving to make investments. You could look into where you can buy Bitcoin in the UK, or start saving invest in property or start a business. Don’t make the same mistakes you made before, learn from what happened and do better this time around. You know now that borrowing beyond your means with loans, credit cards and car finance can leave you overcommitted. Unless it’s a very large and important purchase (like a house) then saving and buying outright is often the better option.
Debt is stressful, being plagued by creditors can cause your mental health to suffer. High interest rates can mean you pay minimum payments each month, but this never brings down the balance as all you’re paying is the accumulated interest. Do what you can to end the madness, seek advice and put a payment plan in place that you can afford.
Are you planning to be debt free in 2018?