This is an expensive time of year for all of us but for those who are already feeling under the strain of financial pressure it can seem a desperate time.
ADVERTISEMENTIt may be tempting to pull the duvet over your head and try to sleep your problems away. Or you may prefer to binge watch on Netflix, anything to take your mind off the debt mountain.
Please do not. Denial of a financial crisis is not the answer. Debts are never going to go away by themselves, no matter how much you may wish.
So pat yourself on the back for admitting to your troubles and then begin with the arduous but practical task of compiling a list to see how much you owe. Leave nothing out.
List your debts and interest payments
Consider what types of debt you have and what level of interest rate you are paying.
Do you have a number of credit card debts? Credit card holders make their money when customers only pay back each month a part of the money they have borrowed. The interest rate level is way higher than you would pay for a personal loan at a bank.
If so, look at consolidating your debts. That means putting all the money you owe into one loan and paying that back over a specific term, usually between 12 months and five years. A fixed rate personal loan is one way. Contact your bank or check on the internet for best terms available.
Remember, if you do take out this kind of loan, you must commit to terms and conditions which mean paying a set amount off each month, without fail. The loan covers both repayment and interest but at a lower than that which you owe now, particularly if you’re servicing several credit cards. Make sure you and the lender agree on what is an affordable monthly amount for you to pay.
Do you have a car? Do you own it outright or are you buying it through a car finance loan? This is an expensive way of buying a vehicle, particularly if you keep rolling the debt on through updating your car every two years. Contact your loan company and check out the options. It may be better to rent a car when you need one or take a taxi. Again, speak to your lender first, otherwise your credit rating may suffer.
Shop around and negotiate with providers
What about your mobile phone contract? Do you update as soon as you are offered the chance? Why would you? Surely a phone that has cost hundreds of pounds should last longer than a year or two. Every time you upgrade, the mobile maker gets more than a charge from the money it makes from you. If you have paid off your phone, consider a SIM-only contract. That could be from around £10 a month. Shop around and negotiate with providers.
The key point is to talk first to those to whom you owe money. Contact your lender and explain the problem. Lenders are businesses who want to get their money back. They do not want to take legal action against you if there is another way of being repaid. A conversation is the first step to a solution that should suits both parties.
For the future, if you’re looking at ways to avoid revisiting the debt trap, here is a good exercise:
Take a clean sheet of A4 paper, draw a line down the centre and set up two columns: “Income” to the left and “Expenses” to the right. Fill them in honestly.
Put your highest and most important expenses at the top, ie: mortgage repayment/rent/utility bills/council tax etc and work your way down to include “frivolous” at the bottom. Those items are the ones at which you need to take a long hard look.
We all need some fun but do we really need several take-away coffees or meals on a regular basis? Is the temporary satisfaction worth the lingering cost? If so, budget accordingly and cross out an item of comparative cost that you can do without.
Remember, it is all about choice. If you cannot afford or do not really need it, hold off the purchase. The pain of debt could be with you for a great deal longer than the pleasure of the purchase.
This info does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances. Also remember, we are a journalistic website and aim to provide the best guides, tips and advice from experts. If you rely on the information on this page then you do so entirely at your own risk.
