Debt Solution - The 7 most important steps you can take.
More and more people everyday are finding out how easy it can be to slip into debt problems. Bankruptcies and IVA’s are on the increase and the debt problem is getting worse.
For those that don’t manage to avoid bankruptcy, the effects can stay with them for many years. The stigma that was once attached to it has lessened but it can and does still cause many difficulties for its victims. For example, It can cause you trouble when you apply for a job because employers can now credit check you.
Often the situation has got so bad that there is no other choice, however, for many, there may still be time to turn things around, if you start now!
Consumers in general now carry a huge amount of revolving debt on credit cards and 47% of people who don’t pay off the full balance each month pay only the minimum balance, a terrible strategy for paying off your credit cards and a very expensive one.
It is part of our culture and what seems to be our consumer ethos, to buy now and pay later. We feel that we are owed what we want and should have it without working for it. The problem is that we end up having to work for it anyway and even harder than if we had done it first!
Fortunately, there is still time for most of us to avoid the inevitable if we make the change now. Here are my top 7 tips to get you out of the debt trap.
Tip 1. Take stock of where you are. The first step is to make a list of exactly where you are, so write down all of your debts and monthly payments as well as totals outstanding and interest rates. This simple exercise will make everything much easier as you go on.
Tip 2. Decide what your most important debts are. You may want to pay off a few small balances first to get some small wins. Otherwise, you should pay everything that you can to the debt with the highest interest while paying the minimum to the rest. When you have paid that off, you should take all of that amount and add it to your payments for the debt with the next highest interest and so on.
Tip 3. Cut up those credit cards! Don’t just put your credit cards away somewhere and defiantly not in your wallet. Cut them up so that you won’t be tempted to use them. When you pay each one off, contact the company and cancel the account. Don’t fall back into the same trap!
Tip 4. Examine your credit report. Your credit report shows you your payment history. You can get a copy cheaply from many places online. You should check it for any errors that could harm your credit rating and write to the companies concerned to have them corrected. This will ensure that your credit problems do not cause you trouble into the future.
Tip 5. Write down and stick to a budget. When you stick to a budget, it fills you with confidence that you can make a positive change and break free of your debt trouble. It also makes it much more likely that you will because you know that you are working everyday towards improving your situation.
Tip 6. Never swap unsecured debt for secured debt. Companies will throw offers at you once they learn that you are in debt trouble and you are a home owner, but they will reposes your home at the first opportunity if you start missing payments so don’t do this unless you have no other option and always seek impartial advice first.
Tip 7. Don’t do it alone. There is plenty of help and advice available to you; you just have to look for it. Talk to debt charities, I guarantee that they won’t be surprised or shocked no matter how bad your situation is. They will however be able to offer good and helpful advice.
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