Things to do to help you get back on track
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- Make a list of all your debts and put them in order of priority.
- Write down all your income and expenses - then see how much you've got to pay your debts.
- Work out how much you can afford to pay to each creditor - a person or organisation you owe money to.
- Consider seeking advice from a debt advice agency such as.
Secrets to demolishing debt. Don't let debt ruin your life. Use these fantastic tips to start you off on the path towards a debt-free life
- Know the worst! Open all bank statements and bills. List all your debts, large and small, this might seem scarey, but you will feel empowered by finally addressing the situation.
- Keep a record of what you spend and where you spend it. Knowing how you spend your money will help you control your spending. Try carrying a notebook with you for three months and record all items of expenditure, however small!
- List your monthly/weekly income and expenditure. Can you make any realistic cutbacks to increase the money available for creditors?
- Prioritize. Some debts are more important than others. Work out which are priority debts eg mortgage, rent, utilities, council tax, income tax, fines and maintenance, and which are non-priority debts such as credit cards, store cards and catalogues.
- Consider what offer of payment you can make to each creditor. For priority debts, try to offer the current charge plus something towards the arrears. For non-priority debts, offer what you can, even if it's 1 per month, until your circumstances improve.
- Write to your creditors explaining your financial difficulties. Send them a copy of your income and expenditure form. Ask if they will agree to accept the offer of payment and freeze the interest.
- Tackle credit and store cards! After priority debts, if you have enough money spare, snowball those cards! The idea is to pay off your higher interest cards first; pay the minimum on all your cards, but use any extra income to whittle down the debt on your highest interest card; put all you have into paying that card off! Once the debt has been dealt with completely, move on to paying off the card with the next highest interest rate. Soon the house of cards will come crashing down.
- Rediscover cash, especially if you find it hard to keep track of your spending when using credit or debit cards. If necessary, withdraw your budgeted amount of cash for the week at the beginning of the week and resolve to just using that!
- Don't be tempted to transfer all your debts into 'one easy monthly payment' secured on your house. If you fail to keep up with payments, you risk losing your home.
Seek further advice. Consider making an appointment to see a debt advisor. They will not judge you. Many organisations offer help and advice. It's important to make sure you choose one that will consider your best interests - check that any advice you seek is independent and free.
Some companies offer to consolidate your debts, but they're doing this as a commercial service, so only consider using them if you've received independent advice to do so.
Debt reduction often ranks as an important financial goal and it also ranks as one of the most challenging, therefore effective debt management is critical to your financial plan. Having the right information is a big part of making wise financial decisions. Check the topics below for investment, credit and money information you can really use.