You have about £10,000 on 5 credit cards and have a 5 year loan with about £5,000 left to pay. Your total unsecured debt is £15,000. You have no major assets; you rent, use public transport and earn a reasonable monthly salary. You are struggling to meet your monthly debt repayment and you are on the verge on defaulting on either your loan or credit cards. What can you do to get of debt?
Credit cards generate the most interest therefore any funds available should used to reduce it as much as possible. But in practical terms, by the time you begin to look for information on debt help, it is most likely you have used up whatever money or credit you have left. Here are a series of easy to follow steps:
The approach
1. Review and scrutinise your bank statement to assess your monthly outgoings. Cut out any unnecessary direct debits or wasteful spending.
2. Confront the problem by calling your credit card company and tell them about your financial situation. Ask for a payment plan arrangement and a freeze on interest till you get back on your feet. A positive response is not guaranteed.
3. Get into the habit of spending less. The way to do this is to write down your shopping list with a budget for what you want to buy. By following through with this approach you will end up keeping to a budget and be able to manage your money better.
4. Seek professional advice. Firstly, talking to someone experienced in matters such as this helps. The advisor should then guide you towards the right choice of debt solution for your circumstance.
5. Always count your money. Get into a habit of knowing exactly how much you have and how much you owe. This habit will also help you control your spending. Overdrafts or a £3,000 credit card limit is not your money. Avoid credit cards as much as possible. You can still pay for items using your bank debit card. Most bank debit cards come with the MASTER or VISA logo meaning that they can be used almost everywhere.
Debt is a problem millions of people struggle with. If you are reading this and you are worried, you are not alone. The key is to take action now before it is too late. Burying your head in the sand will only make matters worse. Taking credit from one credit card to pay another card gives the illusion that your debt is under control. Most companies offer free debt advice. An email or phone call to a debt management company is a useful place so start. Good luck!
Paul Odunaiya is an insolvency specialist and the managing director of Qsolvency LTD, which trades as online-debt-advice.co.uk. Paul has over 5 years’ experience in helping individuals and businesses in financial difficulties navigate their way out of serious debt.
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