There’s nothing more stressful than finding yourself with debt that is seemingly impossible to pay off ? but if you’re in financial straits then don’t despair. There are many ways of managing your liability and working towards a new, debt-free lifestyle. Whatever your situation, begin by seeking help. Whether you choose to confide in close family or friends or in a debt specialist or account, you’ll find that a problem shared really is a problem halved. An impartial advisor may also be able to suggest ways of managing your debt that had not occurred to you.
Of course, there are plenty of steps you can take on your own to deal with your problem. It’s a good idea to assess your situation, calculating the extent of your loans and the amount to be repaid. Many people who are deeply in debt have no idea how much they owe, or what they can expect to pay over the coming years. It’s important to get a handle on the situation you’re in, before you take steps to change it.
Once you know what you’re facing, spend some time grouping your loans into high, medium and low-interest groups. Prioritising your loans from highest to lowest interest is a good way to work out how to manage your repayments. You can then begin to develop a budget that will be the basis of your debt-reduction strategy. This should give you a more accurate idea of where you might be overspending, as well as identifying areas in which you can cut back.
However, there’s more to debt management than simply curtailing your spending habits. In addition to cutting your outings, you could also think about how you might be able to increase your income. Are you set for a pay rise? Would it be possible to take on a second job? Use any bonuses or increases in income to directly pay off your debts.
When extra income or large-scale spending cuts simply aren’t possible, it may be time to look at alternative means of debt repayments. One route that many people take is consolidation ? taking out one large loan repayable over a longer period to cover current debts. Alternatively, you could opt for a debt management plan with reduced interest rates.
The final resort is, of course, bankruptcy ? but don’t take this step unless you really have no choice. There are other intermediate options, such as an Individual Voluntary Arrangement or an Administration, which should help you pay off your debt without sacrificing your assets.