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Help to sort your personal debt

Man and women looking at bills and working out budget using laptop.

Millions of us are in debt. For some, it is in control but for many it is out of control and a daily headache that won’t go away. If you are one of those people, then please read on for a few ideas that may help you out of a deep dark hole.

This step is often the most difficult, it is easier to pretend the problem does not exist and ignore the debt. Thousands of people a year suffer the consequences of this decision and wake to a knock on the door from bailiffs or find themselves applying for a bankruptcy order.

Once you know the extent of your debt, you can start to prioritise your outgoings. However if you find this a daunting idea, then call a ‘free-of-charge’ debt agency which will give you all kinds of advice and help you with a plan to rid yourself of your financial burden.

For those of you who want to do it yourself, here is a checklist to work your way through.

The first thing to do is have a look at all your outgoings and your income and how much you owe. This will help you work out your top priorities, who you owe the most to and which debts are the most urgent to repay with the most serious consequences such as mortgages, rent, any secured loans and council tax.

You may also have less urgent debts such as credit cards, overdrafts and loans, these can be addressed once you have paid for your essentials first.

(1) Make a budget

Drawing up a budget will help work out how much money you realistically have left over after essentials to pay off your debts each month. It will also highlight areas where you may be wasting your money.

It’s simple, draw a line down the middle of a piece of paper, on one side put all your income and on the other all your outgoings and by that we mean everything, even that sneaky chocolate bar that you don’t like to admit.

Make sure to list the dates you are paid and the dates you need to make payments. Rearranging the dates of your direct debits could help make sure you have enough money in your account and prevent any extra charges or borrowing costs.
If you pay by phone, make sure to set up reminders to avoid late payment fees.

(2) Talk with your creditors

Don’t be afraid to call your creditors and explain your situation. They may be willing to help by setting up a repayment plan, freezing interest or even writing off your debt completely depending on your situation. Remember they would prefer to receive some money rather than nothing, it is in their interest to help you.

(3) Pay off as much as you can

If you can afford to divert any extra cash to clear your debts as quickly as possible quickly.
Do not be tempted to take out a loan to pay off a debt, it will just make it worse.

(4) Have a look through 

We have loads of ideas to help you save money by making small lifestyle changes.

(5) Leave your credit cards at home

Paying with plastic doesn’t really feel like we’re parting with cash so we tend to spend more. Whether you’re trying to stay out of debt or are working through a debt plan, pay with cash to reduce impulse spending.

Many of us do not have a clue what our credit card balance is from day to day which makes it even more difficult to control our finances.

Once you have made your budget you should be able to tell how much cash you will need each week for travel, food and other essentials.

Try withdrawing the money in cash and leaving your cards at home to remove temptation.

(6) Other income streams

This doesn’t mean you need a second job – maybe you could take in a lodger, rent out a car parking space, sell any unwanted items at car boot sales – there are a lot of ways you can make a little bit of money that might make all the difference, to help reduce your debt.

(7) Could you cut your bills?

Check if you can find a lower cost deal (start by looking at comparison sites) on the following:

  • Energy bills
  • Insurance policies
  • Mobile phone contracts
  • AA / RAC cover

If you are in debt, we at EcoFrenzy hope this blog will help you to reduce your financial problems. Good luck.