Three Ways to Tame Your Debts
Many people struggling to repay their debts end up feeling trapped - wondering how they are ever going to get out of the situation.
Thankfully, there are a number of things you can do to get out of debt. Here we take a look at a few tips that could have your finances back in order quicker than you may think.
Set a budget
At the heart of a healthy bank balance is a well-planned budget. Budgeting can allow you to keep control over your finances, by allocating a proportion of your salary to each of your commitments - leaving you with an amount that you know is safe to spend (or save) as you wish.
At the start of each month, set out how much you think you will spend on each of your commitments (this is easy for fixed costs such as council tax, but you may need to put down a rough estimate for things like food and energy bills). Add up the total, and the amount you have left is your ‘disposable income’. Then, at the end of the month, look back at how you did. If you still managed to overspend in some areas, then you will know to up your budget for those particular costs.
If your commitments exceed your monthly income, then you should seek debt advice as soon as possible to discuss how you can get your costs down and/or manage your debts.
Switch providers
If you feel you may be paying over the odds for some of your expenses, such as energy or broadband bills, it’s often possible to save money by switching provider. There are a number of websites that make doing this very simple, and the difference in price can often be more than you’d think.
However, be careful of any additional costs - you may be charged to leave your existing provider, and some energy companies have standing charges on their tariffs which may not be immediately obvious on their websites.
Use savings
Although it may go against your financial instincts, it’s usually a good idea to use any savings you have to pay off your debts.
Most importantly, this will stop your debts from growing. Since the interest on debt tend to grow more quickly than the interest on savings, you will spend less money overall by repaying your debts now, and stopping them from growing, than you would by continuing to save money alongside repaying your debts.
Debt resources:
> debt help & advice
> debt management
> citizens advice bureau
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