Today, most of us are in some kind of debt – whether it’s large debts like mortgages and car finance, or smaller debts like credit cards, hire purchase agreements, mail order credit or even your smartphone contract. Most of the time, debt isn’t all that much of a bad thing if you are able to manage it wisely – it can boost your credit rating and give you better buying power for the future. But, if your debts have begun to take over your life, this is where it can start to become a problem. Thankfully, there are several things that you can do to get control over your debts once again.
If you’re struggling with a lot of small debts that you’re making multiple repayments to every month, you might want to consider the option of a debt consolidation loan. Taking out a debt consolidation loan will give you the option to use the credit provided to repay all of your current debts in full. As a result, you will only need to worry about repaying the consolidation loan – which often works out cheaper than making multiple repayments, and is certainly much easier to manage than several. A personal loan is the best option, or you might want to consider payday loans that allow you to repay in instalments, if you don’t have a huge amount of debt and want to be debt-free as quickly as possible. Before borrowing, make sure that you will be able to afford the monthly repayments.
The way that this method works is by tackling the smallest debt first. Continue making the minimum repayment as normal on all your debts, but pay as much extra as you can towards the smallest debt until it is paid off. Once it’s repaid, you can use the money that you would normally pay towards that debt towards the next smallest debt, until that one is repaid, and so on.
Contact Your Creditors
If you are really struggling, or your circumstances have changed dramatically, leaving you unable to manage your debts as well, then don’t put off contacting your creditors or wait until they are chasing you to make payments. Sometimes, all it takes is a conversation with your creditors to sort things out for a while; they may be able to help you out by freezing interest and charges for a while to give you time to breathe, or accepting a lower minimum payment that is more affordable to you.
Debt Management Plans
If all else fails, then a debt management plan could be a good way to help you better manage your debts, but bear in mind that this is likely to affect your credit rating, so approach with caution if you need to preserve your credit score for the future. However, if you have already missed payments to your creditors then your credit score has likely already taken some damage, so it may be worth signing up for a debt management plan to help minimise the impact.
Which of these methods would be the most suitable for managing your debt? Let us know!