I don’t know what it is, but people get themselves into debt for all kinds of reasons. You can fill in the blank with the reason why. Sometimes, life gets in the way and people get off track.
No matter what the excuse is, one thing is for sure: You always have to pay it back! And this is where most people struggle. For some, the idea of being debt free seems more like an impossible dream. But you should remember: As long as you’re earning income, you’ve got options.
The Do It Yourself Approach:
The simple solution to getting out of debt is to not spend so much!
Simply put: Spend less than you earn.
Period.
While that’s easy to say, it’s not so always so simple to actually achieve. Often, even if you have a surplus of income at the end of the month, there are often unexpected expenses that can crop up at any time. What if the car needs repaired? Or what if a major electrical item like the washing machine needing to be replaced?
No matter what your debt level is, the first step to recovery is to setup a realistic budget for the household. Add up how much money is coming in and subtract it from how much money is going out. If that number isn’t positive, work on it until it is! Once that step is accomplished, only then can you figure out how much money you have to devote to paying your debts off.
If you want to reach your goals sooner, take a look at all your regular bills and see where you can make any savings. You can usually find opportunities in things like changing utility suppliers, switching insurance providers and shopping at a cheaper supermarket. Every penny saved will make a difference.
Why You’ll Need a Good Debt Management Plan:
It may be that budgeting alone is not enough to generate cash to pay off debts. You may find the administration connected to your creditors too difficult to deal with. In this case, you could consider setting up a debt management plan with a debt management company. This is where you can agree to a monthly, affordable payment to the debt management company, and they then redistribute it to your creditors.
Creditors may be willing to put an interest rate freeze on any outstanding debts when it is negotiated through a plan for debt management. This is because they are used to dealing with debt management companies on a daily basis and have a business relationship with them that they wouldn’t have with individual debtors.
For people with really serious levels of debt, then there are other options like taking out an Individual Voluntary Arrangement (IVA) or even going so far as declaring bankruptcy. However, there are consequences for your credit history and financial record with both these options. With bankruptcy especially, you may even lose some of your assets. Therefore, it’s a good idea to try to work through your debts with a debt management agency or debt consolidation loan before going down this route.
Each individual case of debt is different. That’s why you should seek independent financial advice before making such an important decision. If possible, get a second opinion so that you know all the available alternatives.
Remember: Debt doesn’t have to hang over you forever. The sooner you work towards a plan, the sooner you’ll be clear of it.
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