When you are in debt, it can be extremely daunting and overwhelming to know where to begin when it comes to paying it back. However, it is important to remember that there is always a way to resolve your debt, so you need to just be realistic and make a plan about how you are going to move forward. You can do this by seeking advice from professionals, such as if you apply for an IVA or talk with a financial advisor, and this is so much better than keeping your concerns to yourself and letting them build up. So, we’re here to help make everything a bit easier by introducing 3 ways to deal with debt!
Be Honest About Your Debt
The first thing you need to do when it comes to dealing with your debt is to be honest about it. The worst thing you can do is not be honest with yourself and pull the wool over your eyes, as it will only get worse. There is no better time than now to face up to the debt, so sit down and write down all of the debt that you owe. It is likely to be worrying, but this is a fantastic step that you can take to deal with your debt. From here, you can start to look at options to help you deal with the debt. This might be taking out a company voluntary arrangement if your business is in debt, it could be speaking with a financial advisor about the different options you have or going to your bank to talk about what you can do. If you’re not sure where to start, this is the best thing that you can do so you know exactly how to move forward.
Identify Your Essential Outgoings
The next thing you need to do when it comes to dealing with debt is to identify your essential outgoings. Sit down and look at exactly what you have to spend each month, such as your rent, bills, food, debt repayments and other essentials like school clothes for children, etc. Once you know how much you’ve got to spend, you will know realistically how much of your debt that you can pay back each month. You can also make sure that you are cutting back on your essentials where possible, such as making cheaper choices at the supermarket or reducing the temperature you wash your clothes on.
Basically, you will have a list of your essential outgoings, then assign as much of the rest of your money as possible to paying off your debts. This is a really positive step that you can take towards paying off your debts.
Have A Clear Repayment Plan
The next thing you need to do is to put together a clear repayment plan. If you choose something like an IVA, this will already be pre-agreed and set up, however if you personally are working to pay off your credit cards and things, then use the previous step to consider realistically how much you can pay off.
For example, say after you have paid for all of your essentials, you have £300 a month spare. We would recommend putting £50 a month aside to create an emergency fund if any unexpected spending comes up, have £100 for spending and then commit to paying off £150 of your debt a month. If you are in more debt, you will likely need to pay off more and have less spending. You could work with a financial advisor if you can afford it to help with this, but the main thing you need to do is have a plan in place. Then, the vital thing is that you stick to this moving forward! As soon as you get paid, make sure you commit to the repayment plan, and you will be in a much better place just a few months down the line. Keep thinking about the financial freedom after it is paid off, and being careful with your spending for a few years will absolutely be worth it for the future.
Final Thoughts
So, there are three ways for you to deal with debt! We know that it’s easier said than done, but commit yourself to dealing with your debt and being honest about it, and your financial situation will soon transform. Like we said, there is help out there for everyone, so make sure that you ask for it if needed.