Money is one of the biggest issues that a lot of us find it hard to talk about, especially to friends and family. If you are having money troubles and find yourself in debt then it can be really hard to get yourself back on track. Today I want to share some tips about how to tackle your finances when you’re in debt.
Write it all down
Although it might be scary, writing down everything you owe and who you owe it to is a fantastic place to start. It’s important to acknowledge the position you are in because until you do so, it is hard to figure out a solution and way out of it. You could just write down everything on a piece of paper, you could make it all into a nice spreadsheet or you could write it down in order of debt size depending on what might work for you.
Work out your budget
If you’ve gotten yourself into debt it could be because of a whole load of different reasons. Regardless of how you got there, by making a list of all of your current outgoings, as well as commitments you might not be able to make at the minute, you will be able to see what you have available each month. This will be important for you going forward so that you can figure out a budget of what you can actually afford.
Contact the companies or people you owe
After you’ve taken the big step to acknowledge your debts it’s time to do something about them. If you are in a position where you cannot keep up with your payments then this is a good time to contact the companies you have credit with.
Companies are easier to deal with and to talk to than you might think and as long as you’re upfront and honest, they can offer solutions and help. Unless you tell them that you are struggling then the companies will expect you to keep paying on time and if you don’t, there could be additional fees added on to your debt.
When it comes to working out a ‘get out of debt’ plan it’s really important to be realistic. When you contact companies they will ask a lot of questions about your outgoings and income. Payment plans and arrangements can be set up to lower monthly payments, to stop interest and fees being added on to your account, but you will need to tell companies what you can actually afford to pay. These companies would rather you be realistic and make the payments rather than default on them again.
Pay off more when you can
If you are able to it’s a good thing to pay more off your debts than what you have agreed to. There are various ways to do this but it would be a good idea to start with the debts that you are being charged interest on. If you have put all of your debts on to payment arrangements and have paused the interest then maybe start with the lowest debt and get it cleared quickly.
If you are in a position where you need some help, there are organisations such as Step Change who can offer advice.