Thursday, May 21, 2020

Financial Real Talk Getting To Grips With Debt

Financial Real Talk Getting To Grips With Debt Many of us have times in life where spending gets out of control, and we find ourselves in debt. There may be periods when you’re not earning as much as usual. Or you may have been living beyond your means for too long. Whatever your financial situation, it always pays to keep tabs on your accounts. If you’re in the red, the sooner you act, the better. If debt is getting you down, these tips may help. Getting to grips with debt: facing up to reality Are you an ostrich that buries its head in the sand? Do you spend without thinking about the consequences? Is it days, or even weeks, since you checked your balance? Do you ignore statements? If so, it’s time to tackle reality. If you’re in debt, you need to get a sense of what’s going on in your accounts, and how much you owe. It’s not a pleasant task, and there may be unexpected surprises on the horizon. But you need to be realistic. Open those statements and check your balances online. Work out how much you owe in total. Write down a list of figures next to the names of people and companies you owe. Jot down interest rates next to those figures. This will enable you to establish the best order to pay back outstanding debts. Working out a budget If you’re in debt, it’s time to make changes. The first step you can take is drawing up a budget. Work out what you earn, and what you can save. This sum can be put towards paying back loans, credit cards or individuals you owe. For the next few months, paying off debts should be your priority. This may mean that you have to cut back on socializing, and buying non-essential items like more clothes. Paying off urgent debts Have you got final reminders flying through the mailbox? Are people calling you demanding money? If it’s got to this stage, you need to take urgent action. If you don’t pay outstanding bills after reminders, you may be liable for legal action. Your credit score will also be affected. There are various options you can consider if you find yourself in this scenario. If you have savings, you can use them to cover your debts. You may have been putting money aside for a house or car. But this is more important. If you don’t have enough money to cover the bills or mortgage payments, seek expert advice. See a financial adviser or visit pages like Reduce My Debts. It is sometimes possible to take out a debt consolidation loan. This is a loan, which is used to cover existing debts. It can be used to pay all kinds of debts, including credit and store cards and rent arrears. Once you’ve done this, you start paying back the loan. Effectively, you’ll still be in debt. But you won’t have anyone chasing you for money, and you’ll just have one repayment to make each month. Another option is a debt settlement. This is a process, which can last up to four years. It enables you to pay back a portion of your debts to the companies you owe. This is a solution that is often recommended to people who have fallen into debt as a result of unexpected circumstances. For example, if you’ve been injured in an accident and had to give up work. Planning for the future Once you’ve dealt with debts, the last thing you want is to find yourself in a similar situation in the future. Start from scratch with a new budget, and a fresh approach to spending and saving. Try and set aside a sum each month, and keep an eye on your finances. Check your balance at least once a week, and make sure you know how much you’ve spent on credit and store cards. If you put something on a card that charges interest, try and clear it as soon as possible. When it comes to your finances, it’s essential to be realistic. If you’re in trouble, the longer you bury your head in the sand, the worse the situation will get. Even small debts can spiral out of control, giving you anxiety and sleepless nights. Your credit score will also be affected by missing payments, which has implications for your future. Get to grips with debt, and keep track of your finances. There may be a rocky road ahead, but the sooner you get help, the better. Image Credits Main   Cards        Calculator   Notice    Bank

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