Is getting debt on top of you? Are you not sure about how to get out of the spiral? Well, debt is the most important concern, and yet nobody would like to talk about it. Knowing that too much debt throws light on our poor financial behavior, we all find it all the harder to admit to ourselves that we are under debt and we are to get out of it by hook or by crook before we lose everything to it.
When I came of age, I had two jobs and the money that I had been making every month was not sufficient to get by because I had to look after my mum as well because she was ill and unable to work. One day my friend introduced me to a payday loan, and I got £200, which I was supposed to pay back £290. It seemed a good offer to me at that time so I, without giving a second thought, gave the nod to it, but when the due date fell on to me, I found that it made me short of that money and I needed £300 to pay back.
Thanks to high-interest rates, I ended up rolling over, and by the age I turned 22, I had accumulated debt of almost £7,500 worth. That was actually frightening, and I still remember that was a Christmas night when I was booing at my account statements, heart heavier, eyes moistened, and a few seconds later, a thought flashed across my mind “It’s all over with us.”
Fortunately, the next day I ran across one of my school friends at Dentist’s, whom I told everything about my situation and then he gave some useful suggestions that actually helped me a lot to get rid of debt. Here I am going to share those tips with you.
A debt management plan may work in your favor
You may have credit cards, store cards, and payday loans, largely responsible for trapping you in debt. If you have a lot of credit card debt and, despite a full-time job, you are unable to pay it off, a debt management plan can come in handy. You can choose either a commercial or free client company to get this offer.
They may be able to protect you from falling further into debt by freezing interest fees and associated charges. However, you should try to pay more than the minimum payment set as it may help prevent your credit card rating.
You will have to look into your budget to cut back on waste to use that money toward your payment. If you try to stick to the plan, you will take a couple of months to settle all your debts. A debt management plan is not just suitable when you have a credit card debt. You can consider this even if you have other debts like bad credit with no guarantor loans.
Solution for overdraft
If you run up an overdraft, you will get seriously into a debt problem if you cannot pay it off as soon as possible, as interest is charged per day basis. Avoiding having an overdraft will not take much of your effort. The first step is to review your incomings and outgoings and see if you can have some money out of it as savings.
You will certainly find many areas where you can trim down your expenses, like monthly subscriptions to coffee, TV, magazine, and the like. Go through your bank statement and see where your money is going down the drain. Cut that waste out, and you will eventually save money sufficient for not running up an overdraft.
What if you have built up payday loans?
A debt management plan is definitely a solution, but apart from it, you can deal with your payday lenders directly. You can make a payment plan and propose it to your payday creditors. Make a plan that suits your financial situation.
Show some discipline in your payments to convince them. If you choose a debt management plan, you will be asked to make fixed monthly payments for probably up to five years, and if any debt is left, it will be written off.
Choose bulk payments over little payments
It depends on the type of debt you have taken on. If a large portion of outstanding debt is credit card bills, you should try to pay them off as soon as possible. It does not make sense to make little payments over time, and interest keeps accruing over unpaid balance because this will undoubtedly increase your debt.
As far as it is about other loans, no lender would raise an objection to pay in bulk as long as it covers the outstanding balance. If you have a windfall, you may utilise it to pay off even those payments not yet due, so you get free from your debt. Make sure your lender does not charge early repayment fees, and if so, go ahead if you can still save money.
These were the suggestions that my friend gave me when I had fallen into debt. These suggestions actually helped me to get out of debt.
The key to avoiding debt is staying away from high-interest-rate debts. However, if you still need guaranteed loans for bad credit, make sure you do not run out of money after paying them off for your recurring expenses.