The word debt comes along with certain connotations and, often, it summons up fear. However, debt is a common way of life in today’s climate and it shouldn’t have to be something to panic about. But perhaps our main worry is that we could let debt pile up and become out of control. Well, here are our top three tips on nipping debt in the bud and remaining in control of your finances.
It might sound like a simple starting point, but it is an essential one. Make sure you account for all of your outgoings (including current debt repayments) and measure them up against your income. This will give you a clear view of where your money is going and how well you are balancing your finances. Start by highlighting your income as a whole (after tax) and use it as a header to then begin deducting your outgoings: regular bills such as gas and electric, rent, broadband, mobile bills and so on. Next, outline your debt repayment sums and detail what they are. This way, you can clearly see what you are budgeting for each month and what you are left with. It could be that you are already seeing a trend wherein your outgoings are putting too much pressure on your income each month. So, if this is the case, you have still taken a useful and insightful step, and will be in a much better position to speak to an expert about the actions you can take now to help you remain in control.
Once you have a plan, it could be that you are in a position to look at a financial solution that will help tide you over and get back on top of any existing debts. For example, if you are able to transfer a credit sum which is accumulating interest onto an interest-free credit card for the remainder of the time owed, you could save on paying interest fees and manage the debt with the minimum monthly payment. But it is important that you compare which options suit your circumstances best. You can use comparison sites and so on but ensure that you are clear about the function of the financial solution first. For example, will it be to cover a one-off purchase, or is it a helping-hand with regular bills that you will pay off in full at the end of each month etc? if you are unsure which financial support option is best for you, speak to an expert or book a meeting with your bank or building society.
One simple way to help you in the planning stages of your finance management is to look at your outgoings and explore whether or not it might be best to consolidate your debt repayments. This option will mean that you lump your current debt payments together and track them all in one place. In the long-term, it can ease the pressure of keeping track of multiple payments, help you to plan for the future and encourage a stronger focus on reducing your likelihood of taking out more credit etc. It is a very popular way of reducing your need for future lending and maintaining control of your finances. Not only is this potentially an easier way to keep track of your money, it allows for a little more flexibility on your monthly budget for unforeseen circumstances such as repairs or emergencies.
Overall, debt shouldn’t have to feel like a struggle all of the time. If you plan and ensure that you can track your income against your monthly outgoings, you can set a plan in place to reduce your debt for the future, and there will always be options for additional support when you need it.