Keep your debt in check; 6 steps to help keep on top of your money
So 2019 is upon us and like the majority of people the resolution you made this time last year to sort out your finances probably hasn’t quite worked out like you’d hoped. The January sales probably proved too much of a temptation, not to mention the long wait in January for that first pay-cheque to come through before those horrible heating bills in February and March that leave you out of pocket before the year’s even got under way.
Well, you’re not alone. Falling into debt is common-place across the UK and it’s easy to fall behind on payments due to a multitude of reasons that more often than not are out of our control. That said, there are some things in life that we can control and trying to manage the debt you already have is a good place to start.
Beginning the New Year with a positive outlook on your finance will help to set you up for a cracking 2019, so here at Mr Lender we’ve put together 6 tips to help you get on track. Tackle them all at once or one per week, whichever suits you best!
- Try to limit any additional debt
It sounds obvious, but if you’re behind on card and loan repayments, avoiding the trap of adding more and more debt is crucial. By using debt to pay off other debt, it only creates a debt spiral and you can find yourself worse off as a result.
With this in mind, it’s worth removing unnecessary forms of credit that you have. You can find this out by checking your credit file online and there are companies that offer free trials, so it shouldn’t cost you anything. With access to your credit report, you will be able to see all the cards and loans that you have open including payday loans, credit cards, direct debits, phone contracts and store cards. To simplify your finances and avoid over-spending, you can then close any accounts that you do not use regularly and minimise the number of credit lines you have open.
- Speak to your debtors, or an experienced advisor
It’s good to talk! By avoiding communication with those that you owe money, it can lead to extra fees and cause the collection phone calls and letters to keep coming. Most credit providers and utility companies are used to dealing with late repayments and by regulation, are required to offer forbearance to the customer.
By simply giving the debtor notice that you may not be able to make a repayment, they might be able to delay your collection date or allow you to take a repayment holiday. In some cases, you may be able to set up an arrangement or pay plan allowing you to repay in smaller instalments and over a longer period of time, so you can get your finances in order.
For free and impartial advice, you can speak to one of the many debt related charities. Here at Mr Lender there are a number of debt advisors we would recommend, such as Citizens Advice Bureau, StepChange, National Debtline, and Money Advice Service
- Budget more effectively
This is where your organisational skills can be used to great effect. Create a list of all your current earnings and expenses, taking everything into account such as food, accommodation, entertainment and bills. See if you can find ways to reduce the cost of your outgoings, such as using a comparison site to switch utility provider or cutting down on luxury groceries that you don’t need. By saving a few hundred pounds each month, or any saving for that matter, it will slowly help you overcome your debt.
- Think of using a balance transfer credit card
If you have several credit cards, you can potentially pass on all the debt to a balance transfer card. If there are providers with special offers, you may be able to get a zero percent credit card, making all your credit card debt much more affordable – and possibly the cheapest form of borrowing possible too. The balance transfer cards are available long-term and also for those with bad credit, so it can certainly help someone get over debt.
- Surround yourself with the right type of people
This is hugely important and possibly one of the hardest steps to follow and maintain, especially at this time of year when socialising is at its highest. It is common for those with debt to overspend on social activities such as going out and holidays. If you find that you are in a social crowd that enjoys the finer things in life, it might be better to surround yourself with people on a similar budget, at least whilst you work through your debt troubles. By feeling pressured to overspend at fancy restaurants or shopping centres will only add to your financial woes.
- Debt management
A debt management company will start by making a list of all the companies you owe money to and contact them individually to state that you’re working with them. The company will then calculate your income and expenses such as travel, food, entertainment, accommodation and utilities. They will look at how much you owe and work out a repayment plan, so you can pay off your debt to each company with enough for your necessary expenses.
Also known as a debt consolidation loan, it‘s the process of taking all your current debt and putting it into one pot. Your income will go straight to the debt management company who will pay off your debts directly and you will be given a weekly income to pay for your expenses. Debt management firms will typically take a fee for managing your debt or if you work with a debt charity, there shouldn’t be any charges.
Of course, none of the above will be easy and you’ll need to be tough on yourself at times if you want to see it through. That said, just think of the rewards and the thought of how 2019 could finally be the year you start making a difference to all that debt and all that stress.