Advertisement:
Category: Debt Date: 1/6/2012
Did 2011 fly past without your debts getting any smaller?
Maybe you had to resort to credit cards, catalogues or an overdraft to finance the festive period?
The New Year offers the opportunity to take action and get debt-free – here's how you can start...
You may be able to save money just by shifting balances from your more expensive credit cards to your least expensive card. This also goes for any store cards which tend to be more expensive than the standard interest rates charged by credit card providers.
Some existing credit cards you have might also offer a 0% balance transfer deal so pay attention to any marketing you receive from your existing providers.
Fully itemise what you spend each month. A great way to do this is on a spreadsheet, or by using a budgeting tool such as this one from the Money Advice Service.
Once you've drawn up your budget, take a detailed look at your spending. Are you getting the best price for your home insurance, or gas/electricity supplier? Do you use that gym membership?
If debts are really on top of you then the problem you have is not going to go away simply by trimming around the edges of your spending – you need to be brutal and look at your lifestyle too. Do you go out to restaurants regularly? Do you go out every Friday night?
We're not saying stop going out altogether, but going out once instead of twice a month can still free up a reasonable chunk of money.
If you've got an expensive car and the finance for it is crippling you – can you sell it, buy a less expensive vehicle and take out a smaller loan? Or perhaps you could save on petrol and use the car less regularly, by doing a car share or cycling to work instead?
The more you can save, the more you can put towards repaying your debt.
Eliminate the risk of you forgetting your debt repayments by automating them.
A standing order will let you pay a set amount, on a set date of the month and most credit card providers will allow you to pay in this way, even if they don't publicise it!
You should find instructions on whether your card provider accepts payment by standing order as well as how to set this up on the reverse of your credit card statement.
Applying for a long 0% balance transfer credit card can be a good idea as it can give you the opportunity to pay off all, or a large chunk, of your debt without paying interest on it for an initial period. You will have to pay a Balance Transfer Fee to move debt across (usually around 2.9% to 3.0% of the amount you transfer) but this is still cheaper than having debt being charged 16% per year!
Watch out though, another credit card means an extra credit limit – more money that you could borrow if you're not disciplined. So close any cards you don't need to make sure you don't rack up further debt.
A personal loan can work out more expensive than a credit card, but has the big advantage of a set end date and a very real light at the end of your debt tunnel.
Most New Year's Resolutions fail because of lack of willpower. Remember that although it's never exciting repaying debt, it will be exciting getting out of debt.
Set yourself regular targets and rewards. When you repay your first £1,000 of debt for instance, you could reward yourself with a well-earned restaurant visit.
Try not to get stressed about your debt. It's only money after all – the most important thing is your health. Getting outdoors regularly for a walk, jog or just cycling with the kids can really help you think your problems through and put perspective on matters. It may also help to talk about matters with close friends and family.
There's no debt problem that can't be solved, even if you're apprehensive about the measures you may need to take. But with debt you can be sure that the longer you leave a problem unaddressed, the worse it will get.
Talk to a charitable organisation such as those listed below and you can be sure of honest, supportive and balanced advice.
A charity that gives free debt advice and counselling.
Provides free debt counselling.
Debt isn't just a financial problem; it's an emotional one as well. The Samaritans have lots of experience helping people through financial difficulties.
Compare 0% balance transfer credit cards Compare personal loansDealing with debt
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at anytime.