Debt can affect the best of us. The truth is, being in debt is an unfortunately very common thing these days. The increasing cost of living and decreasing wages means that many people are struggling everywhere. Add to the mix the fact that we have still not quite recovered from the recession – and it’s easy to see why debt is rife. If you are in the unfortunate position of having a great deal of debt, then you know what suffering it can cause. Having lots of debt can take a serious toll on your life, in many ways. It can affect your day-to-day life, reducing the amount you have to spend on everyday essentials. It can also dramatically reduce your quality of life. Both physical and psychological problems can occur as a result of being in debt.
However, there is always something which can be done to improve the situation. In this post, we will take you through a simple debt-management plan, step by step. Let’s dive right in.
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Check Your Credit Score
The first essential step you need to take is to check your credit score. Your credit score can affect every other aspect of your financial life. That’s why it is important that you check it first, so that you know exactly what you are dealing with. Many of the steps outlined in this post will happen to positively affect your score. However, there are also certain other things you can do to improve your credit rating, and you should take those on board as well. For that reason, it’s worth looking into credit repair. Look here for more info: aaacreditguide.com
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Make An ‘Outgoings’ List
Debt-management is about getting to a place where you are not spending any more than you need to. The more money you have freed up, the quicker you can pay off your debts. So the next thing to do is to make a detailed and honest list of all of your outgoings. Work out what you are likely to spend in a month. Understand that this isn’t a budget, but an honest portrayal of what you usually spend. The golden rule of debt-management is to be ruthlessly honest with yourself. Otherwise, you won’t know what you need to do.
Cut Out Anything Unnecessary
Once you have made your list of outgoings, it is time to start being strict with yourself. Go through your list and figure out what it is that you could easily get rid of. Chances are, there are several items on that list which you could remove altogether. Some of these might require lifestyle changes; if that is the case, then so be it. That’s all part of the process. As well as cutting out things altogether, look to see if you can reduce the essentials which are remaining. Can you switch phone or Internet contracts? Can you reduce your grocery bill by shopping somewhere cheaper? Remember: every little bit helps in the long run. If there is a cheaper option, go for it.
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Transfer Credit Card Balance
If your debt is primarily on a credit card, then this step is an essential. Transferring credit card balances to another bank is a great way of ensuring that you don’t pay back more than is necessary. The trick here is to look for a bank which is offering an introductory offer – such as no interest for twelve months. That way, you will not be paying interest on your debt. This can make a huge difference.
Check Your Bank Account
Is your bank account the right one for you? When did you last check? The truth is, people everywhere have bank accounts which just aren’t necessary for their own needs. Chances are, you do not have much need for an overdraft. Yet, so many banks offer overdrafts automatically. If you have one, it is a good idea to pay it off as soon as you can. After that, you might benefit from shopping around for a better bank account. This can really make all the difference in the long run. More info here: www.moneyadviceservice.org.uk/
Draw Up A Plan
Now, it is time to sit down and work out a detailed plan for paying off your debts. Obviously, you are hoping to pay your debts off as soon as you can. But you must not make the mistake of being over-confident in your ability to repay. Otherwise, you will only end up causing more trouble for yourself. Be honest with your plan, but also a little ambitious. Often, that is the way that works when it comes to paying back money.
