When you find yourself in financial difficulty, it is important to formulate a plan of action and learn how to tackle your debt. Below we have five important tips for helping you do this:
1. Organise and prioritise your debts
First of all, you need to write down all the individual debts you have, so that you know exactly what you are dealing with. Simply getting it down on paper can often make your situation seem a lot clearer and easier to deal with. Once you have written down all of your debts, you should go about prioritising them from most important to last. It is common sense that the largest debts you have are often the most important, but don’t forget that others may need to be prioritised higher, such as debts to utility companies who may be considering cutting you off. Once you have prioritised your debts, you will have a starting point to take action.
2. Draw up a budget
When it comes to debt, being organised is often your greatest weapon. By drawing up a budget you will be able to see exactly what you have coming in and going out, and what money you can put aside to pay debts. Be honest with yourself when writing your budget, don’t forget to include the small things such as going to the pub on Saturday night; these seemingly insignificant outgoings all add up and can make a real difference. A budget is also useful for when dealing with your debtors, as many of them may ask for a report of your personal finances before they come to an arrangement with you.
3. Talk to your debtors
Believe it or not, most debtors would rather come to an arrangement with you, rather than go to the trouble and expense of sending bailiffs to your home, or even going through the court system. The people you owe money to can even be really quite flexible in arranging a payment plan for you to repay your debt. This is especially true with utility companies who often have many more payment options than you may realise. When it comes to credit cards and loans, many debtors will agree to suspend the interest on your debt, making it easier for you to chisel away at it with repayments. Also, simply being willing to discuss your debt will often keep them off your back a little bit.
4. Talk to the experts
Getting informed and professional advice from debt experts is always a good idea. Expert advisers can help you manage your finances and get back on track with your debts. It is often possible to get free advice, and you can receive invaluable information regarding debt management and what your legal rights are.
5. Find out what are you’re entitled to
Don’t forget, you may also be entitled to certain benefits and forms of income you may not have realised. It is often possible to receive rent or council tax benefits from your local council, and you may also be entitled to tax credits which could help you enormously. Finally, don’t forget about any credit card or loan insurance you may have taken out, these will often be able to pay instalments for you whilst you are unable to, or if you are out of work.