Being in debt is somewhere no-one wants to be - especially if it starts to become hard to manage.
However, not all debt is necessarily 'bad'. Some types of debt are simply an essential part of living our lives the way we want to. Student loans and mortgages are two clear examples of debt that allows us to do things we otherwise couldn't afford to do.
If you feel like you're losing control of your debts, though, it's important to take action to sort them out - and do it sooner, rather than later.
Am I losing control?
It can be difficult to keep track of your debt, so how do you know when it is becoming too much?
If you can answer 'yes' to any of the questions below, then it might be time to seek professional debt help:
Have your creditors been in touch about outstanding/missed repayments?
Is your income lower than your outgoings?
Are you forced to use your credit card to purchase essentials, such as food?
For some people, a simple re-arrangement of how they deal with their finances can help them get back on track. However, this isn't always enough - and if it isn't enough for you, you might want to consider seeking professional debt help.
Which debts should I focus on?
In general, debt needn't be a problem, providing you keep it under control. However, if you're in financial trouble and wish to sort out your finances, you should start by ordering your debts according to their priority. This will show you which debts you should focus on when budgeting.
Secured debts, such as mortgages, should be viewed as your first priority. This is because if you don't keep up with repayments to these, you could risk severe consequences, such as losing your home.
Your non-priority debts, such as credit card debts, are a lower priority. This doesn't mean you aren't obliged to pay them, but the consequences of failing to pay a non-priority debt are simply less serious.
Basically, you need to focus on paying your priority debts - it may be necessary to ask your non-priority creditors to accept lower payments if that's the only way you can make sure you can afford your mortgage, utility bills, etc.
If your finances are becoming hard to manage, and you want help prioritising your debts - or any other kind of financial help - you should contact a professional debt adviser. You may benefit from debt consolidation, debt management or an IVA and they will tell which is best.
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