Dealing With Debt
Dealing With Debt
Debt is something that most people find themselves dealing with at some point in their lives – the average household debt in the UK is over £50,000, according to The Money Charity. Whether it’s a mortgage, overdraft or another type of loan, debt is a part of life for a lot of people, but dealing with debt can be stressful. In this post, we’ll explore a few ways to help you get to grips with your debt.
None of these are foolproof ways to sort your debt out, and we know that they won’t always apply to every individual. But this should be a useful starting point on your path to getting back in the black.
Work out what you owe
This is the most obvious, but probably the most important thing when it comes to dealing with debt. You won’t be able to pay off what you owe without first knowing what that amount is.
With debt, it’s rarely as simple as “I’ve borrowed £100, therefore I need to repay £100.” You’ll need to factor in things like interest rates and any other terms or fees that are part of the debt repayment.
Pull together any paperwork you have that sets out the terms of your debts, including bank statements, and familiarise yourself with how much you’ll have to repay month-by-month and when certain debts will be repaid.
If you owe money to multiple companies at once, then this can be a tricky and time-consuming thing to get your head around – but it’s absolutely worth it to make sure you understand what you owe and when. It’ll reduce stress, make you feel more in control, and as an added bonus, avoid the risk of _over_paying any of your debts.
Reduce your spending
If you owe money, you’ll need to pay it back. That means there’s another expense to account for every month… which means you may need to try and reduce your spending if at all possible.
We have some great tips to help you spend less and save more, and they can all help you keep a little more money in your account. You can then decide to use that to start to pay off your debts, rather than the repayment taking away from something else in your life.
Avoid borrowing more to pay off your debt
Debt is essentially borrowed money – and borrowing more on top of that can lead to big problems. For starters, you’re just making more debt for yourself, including all the extra interest and fees on top of the actual money borrowed.
Some loan companies – particularly those that offer short-term loans – can have huge interest rates that can lead to debt spiralling out of control in no time. If you do need to borrow more to pay off an existing debt in the short-term, then make sure you’re fully aware of the risks, the terms and conditions of your new loan and the repayment schedule – the last thing you want is a nasty surprise while you’re already dealing with your debt.
Look for other ways to help
There are various other things you could check and potentially take advantage of to help you clear your debt.
The Citizens Advice Bureau and National Debtline both offer free guidance for people dealing with debt and are definitely worth exploring if you need more information or tips on getting back in the black.
MoneySavingExpert also has some great advice on things you may not have considered before. For example, you may be one of the 400,000 households in England and Scotland who are in the wrong Council Tax bracket and are overpaying. Or you could check for grants and support from energy or water providers, many of whom offer schemes to customers to help them repay their bills.
And remember – you’re not alone in dealing with debt. There are plenty of people out there handling similar situations every day – so don’t feel like you have to tackle this without reaching out to others at the links above for a helping hand.