Debt can be stressful at the best of times, however when your debt begins to escalate out of control, it may be time to reconsider your financial position. From student loans to mortgages, we understand how hard it can be to pay off multiple debts at once, especially when you’re not earning a lot. Large loan repayments will most likely leave you strapped for cash every month, and combined with living expenses, just getting by day-to-day can be a struggle.
Having little money left over at the end of the month drives many people towards credit cards, which in turn escalates their debt problems. If you want to get debt free however, you’re going to need determination and a strong will. Thankfully, there are a number of ways to deal with your debts before they escalate, so don’t worry if your bank balance isn’t looking healthy.
The first step to getting out of debt is to acknowledge the state of your finances, and also how your expenditures are affecting the way you live your life. Apart from giving you peace of mind, organising your debts will help you to relax and also financially plan for the future. Admitting that you have a problem with debt is a great way to begin your financial recovery, and it also allows you to create stepping stones to achieve your money goals. Here are a few ways to get you back on track with your accounts, and your life.
If you want to get out of debt, then you’re going to have to be realistic about your financial situation. This means getting an up-to-date bank statement and going through all of your income and expenditures. Some people in serious debt rarely keep track of their finances, so if you want to get back into the green, you’ll have to see exactly where your money is going. Unless you work on commission, your pay cheque is going to be the same every month, meaning you’ve got a great starting base to plan your expenditures.
Add up all your direct debits, and see if you actually need the things you’re paying for. Satellite television, depending on the package, can be quite a hefty deduction from your finances every month, so make sure you cancel the debits you don’t really need. If you’re looking for more information on dealing with debts and IVAs, why not visit www.iva-expert.co.uk for more financial tips.
Once you’ve cancelled debits that you don’t need and reduced your expenditures, it’s now time to prioritise your debts. This means working out the repayments that come with the highest amount of interest, and making sure you pay them off first. Although small debts are also important, many come with low level interest rates, meaning they can be placed on the back burner until the bigger amounts are paid off.
You’ll also want to start making extra payments to your creditors to prove that you are on top of your debts. Missed payments can be very detrimental to your credit rating, meaning that you won’t be able to access the best interest rates if you ever apply for a mortgage.