I sometimes get contacted from people seeking advice on their debt. They are at various levels of default with finance institutions. It’s heartbreaking to hear, but it’s not an area I provide advice on; plus i don’t want my fee to add to their financial difficulties. This blog article does offer some pointers on debt management though.
First, there is the National Debt Helpline. They offer free, independent advice. The ‘independent advice’ means that they aren’t there to sell you something (such as bundling all your debt into a new loan), but instead provide you the best advice, independent of any conflicts. You can contact them on 1800 007 007. If you are behind on your repayments and worried about your financial future, call them now.
If, on the otehr hand, you just know that things are getting a little tight and that you should be doing better, consider the following.
- Stop borrowing. When you are deeply indebted, deciding which route to take can be a tough decision. This is the first hard decision you must take towards freedom. Do not incur a new debt to pay off an existing debt.
- Do a budget. Avant offers an excellent budget planner for your free use. Download it, fill it in and document where your money is going. It is only then that you can see where improvements can be made.
- Tackle your debts. List down all your debts and the interest rates. Generally the higher rates will be for credit cards, then personal loans, then car loans and then your mortgage. Focus on the higher interest rate debt first.
- Allocate excess cash to reduce debt. Make reducing debt your number one priority. The funds might come from an extra shift at work, a tax refund, winnings, inheritance. Put the extra cash towards reducing debt.