Posts Tagged ‘debt reduction guide’

Paying Off Debt – Step by Step

When money is tight, paying off debt can be tough. If you’re struggling to repay your debts, it’s important that you take the right action before those debts can become unmanageable.

Here’s a simple step-by-step guide to paying off your debts.

Step 1: Assess your Finances
Many people who feel they can’t afford their debts may be able to improve their situation just by assessing their finances and making a few changes.

Think about how you may be able to cut back – buying food from ‘budget’ stores, for example, or even selling your car and walking / cycling / using public transport. By cutting out some or all of your unnecessary expenses, you should find yourself with more money to put towards your debts.

Also remember the importance of budgeting well. To get your finances truly in order, you’ll want to keep track of how much you’ve been spending on all your essential costs (including debt repayments) in previous months, and put this amount aside every time you get paid. What’s left is yours to spend as you wish – although it can be a good idea to put some of this ‘extra’ towards your debts in order to pay them off quicker.

Step 2: Speak to Your Lenders
If you find that you’re still struggling after trying to cut back on your outgoings, you should speak to your lenders to discuss the situation.

Many people worry that their lenders will take strict action as soon as they fall behind on their debts, but it’s in both your interest and your lenders’ interests to discuss the matter, trying to agree on terms that will ensure the debt is repaid as quickly as realistically possible.

A lot of lenders will agree to a temporary reduction in your payments to allow you to get your finances back on track. If they don’t, or it doesn’t help, you’re at a higher risk of more serious consequences – in some cases, even bankruptcy – in which case it’s time to get advice from a professional debt adviser.

Step 3: Get Debt Advice from an Expert

If you can’t afford your payments and have been unable to come to any agreement with your lenders, then a professional debt adviser may be able to help you find a debt solution that can help. There are a number of debt solutions available, all designed to help people with varying kinds of debt problem.

Your debt adviser will be able to explain the pros and cons of different debt solutions and help you establish if there’s one that’s right for you.