The first step towards taking control of your debt is to open all of your bank statements and bills and make a list of all your debts. This may seem terrifying but it is the first step to addressing the situation. Once this is done you can really start to take control of your finances. Try implementing all or some of the follow tips:
1.Write down what you’ve bought and where you spent. Knowing how and where you spend your money will help you to keep control. It sounds a little annoying but simply carrying a small notebook means you can record all of your expenditure. You may notice patterns such as spending more just after payday or at weekends etc and just being aware of these habits will help you to break them.
2.List what you spend on a weekly/monthly basis and think about cutbacks you can make to increase money available for creditors. Perhaps you could find a better deal for your phone tariff or you could take the bus to work to cut petrol costs.
3.Realise that certain debts are more important than others. Sit down and have a think about which are priority debts, eg mortgage, rent, utilities, council tax, income tax and which are non-priority such as credit cards and store cards.
4.Realistically consider what offer of payment you can make to each creditor. For priority debts it is a good idea to try and offer the current charge with a little extra towards arrears and for low priority just offer what you can. Even if it is a small amount.
5.Don’t try and avoid your creditors because they will not go away. Let them know your circumstances because without that knowledge they can’t do anything to help you. Write to them explaining your situation and ask if they will agree to accept the offer of payment and freeze the interest.
6.After priority debts move onto the credit cards and store cards. Use whatever extra income you have to whittle down the high interest cards and once the debt has been cleared completely move onto the next one with the next highest interest rate.
7.Use cash! If you find it difficult to keep track of what you have spent using credit and debit cards then withdraw a budgeted amount of cash. Try getting a certain amount out at the start of the week and resolve to just using that.
8.Don’t fall into the trap of transferring all of your debts into one monthly payment secured on your house. If you fail to keep up with the payments, your home will be at risk.
9.If you are still really struggling it may be an idea to seek professional help with a debt advisor who will help you to gain control of your finances. You may also find it helpful to talk to a life coach specialising in this area. They will be able to help you understand why you are in this situation and what you can do to ensure it doesn’t happen again.