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Thursday, October 1, 2015

4 things to remember when facing debt

By Andrew Reilly

If you are in debt, you are not alone as there is a growing number of people around the country facing up to financial difficulties. You may not know where to turn to for help, but the sooner you take steps to improve your financial situation, the better your chances will be of getting out of debt.

You have to review your finances

The worrying thing about many people with their finances is that they never actually realise what sort of state they are in. This means that some people may actually have a poorer set of finances than they first thought, or it could be that with some movement and pushing things around, your financial situation is not as bad as it seems. This is why it is vital that you take some time to look at your earnings and all of your outgoings to make sure that you are making the most of your money.
When you do this, you should look to:
  • Draw up a budget
  • Find out your credit score
A budget is the ideal starting point in getting your finances back on track. Once you know how much money you have coming in every month and what you need to spend on essential items, you have a clearer idea of your finances and what you can do with them. If you need to take control of your finances, drawing up a budget is essential.

You will also find that looking up your credit score is a sensible idea. This will allow you to work out what sort of shape you are in and whether you will be able to obtain credit from traditional sources. If your credit score is poor, you may be denied credit from traditional sources, which means that you will need to look elsewhere. You should also take steps to improve your credit rating.

You need to take on your debt

If you have debt, it isn’t going to go away by itself. Some of the biggest problems that people face with debt management comes with the fact that they don’t take action to improve their finances. This is where working out who you owe money to and you can resolve it is a sensible idea. You should look to prioritise your debts because some debts are more important than others. You don’t want to owe money to anyone but taking care of your mortgage or rent is more important than utility bills. If you need help in prioritising your debt, speak to an expert who will go through your bills and provide you with the bets information with respect to structuring what debts you pay first.
You should also be looking to save money, so if there are any bills or services you have at the moment that you don’t need, you should look to stop them. The more money you can save, the easier you will find it is to pay off your debt. You will also find that cutting back on the level of credit you use or have access to will be of benefit. Even if you have a high level of debt, taking small steps will help you to move in the right direction with respect to finances.

Are you entitled to any support?

It may be that you are entitled to financial support, such as Income Support, Jobseekers Allowance or Working Family Tax Credit. While the media talks of people who they believe scrounge the system for money that they don’t deserve, many people also don’t claim money that is rightfully theirs. You may not have any additional money owed to you, but you may have, so make sure to check it out.

Do you need more assistance?

Getting out of debt can be difficult but help is available. Some people find that using a managed account is of benefit so speaking to your bank about what options are available to you could be of significant benefit. You may also find that sitting down with a financial adviser will give you great advice and plenty of ideas for moving forward with your finances.

No matter how much debt you are in, taking control of the situation is vital and this will allow you to move forward with your life. Many people recommend consolidating your debt and this is where taking out a guarantor loan can be of benefit. When you consolidate your debts into one loan, you make life easier and you can significantly reduce the amount of money you need to pay each month in servicing your debt. If you are looking to move out of debt, consolidation could be a very wise move.

About the author: Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn't sat behind a laptop or researching a story, he will be found watching a gig or a game of football.

Image: Chris Potter/Flickr, CC BY 2.0