3 Ways to Tackle Your Debt

7408488456_140de6e14e_bThere are many reasons people end up in debt, from losing a job and borrowing to get by or running into financial trouble when trying to make repayments on an existing loan. If you’re having problems with debt and it feels like the amount owed is starting to suffocate you, don’t panic.

The first step is accepting that you have debt that needs dealing with and then developing a strategy to cut it down and eventually become totally debt-free. Various things can be done to help make your debt more manageable. Here are three ways to make a start.

Debt Management Plan

Whether you can only afford to pay creditors a small amount each month or just need a little more time before you can make full repayments, a debt management plan can be used to make such arrangements. Licensed debt management companies are used to create such a plan with creditors so you can afford repayments.

This does go a long way towards clearing debt without putting more pressure on your finances. However, debt management companies charge a set up and handling fee and the creditors may not agree with the plan devised. Ensure the company you use is authorised by the Financial Conduct Authority (FCA).

Consolidation Loan

Borrowing more money may be the last thing you feel like doing but a consolidation loan can be incredibly useful for making your debt repayments clearer. This puts all the money you owe in one place, which is helpful if you owe to different creditors.

It makes budgeting each month a lot easier too. If you have money that must be repaid immediately but are sure you will be able to pay it back further down the line then using a guarantor loan is one possible option which you can learn more about, here.

DIY Debt Reduction

Avoid the fees encountered with a debt management company and consolidation loan by reducing debt yourself. Simply calling up your credit card and loan companies enquiring about lower interest rates can work (although the repayment periods will likely increase).

Many creditors have their own hardship programs as well, which are designed to help those in danger of being suffocated by their debt. Simply ask about them and they should be willing to sort you out. There are plenty of free online tools and apps for budgeting and managing your debt that provide information and help to rid yourself of it too.

Join our newsletter

If you like Critical Financial, subscribe and get our latest content via email.

Powered by ConvertKit

Share this post:

Leave a Comment