Saturday, April 2, 2016

A Step-By-Step Guide To Dealing With Debt

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Debt is an unfortunate by-product of modern living for many people across the globe. Year upon year, the number of people experiencing crippling debt rises and rises. There is enormous variation in debt; the amount you owe, and who you owe that money to, make a significant difference. No two situations are ever the same. But there is one thing which all debtors have in common: their debt is having a negative impact on their way of life. No matter the size of your debt, it is likely to be affecting your life in ways which you would rather it wasn’t.

There is good news when it comes to debt, however: it is manageable. All debt, regardless of its size, can be improved and managed effectively. All it takes is the right approach - and some time. How much time does, of course, depend on the debt and the individual - but it is always possible. This is important to remember if you are in debt, as your psychological state makes a huge difference. Being stressed about it generally causes people to overspend, and so get in more debt. That’s why the first step in debt management is to try and adopt a healthy approach to your finances. But what about after that? Let’s take a look now.


The first thing you must do when you need to take care of your debts is to spend some time focussing on your outgoings. It is important that you take the time to sit down and work out what you are spending. Write it all out - how much are you spending per week, per month? On what? If you are diligent in this process, you should soon be able to spot those areas which are prone to overspending. You can then start to work out a way of improving those areas.

Let’s say you have identified that you seem to overspend on your grocery shopping bill. Now that you know this, you can take active steps to resolve it. This might include shopping at a cheaper supermarket, for example. Or you might decide to start planning out more of your meals. This step alone can make a dramatic difference to your expenditure. Most people tend to overspend on food, so adopting a planned approach to eating can make an enormous difference. Another typical scenario is that you might notice areas of indulgence purchases which you do not need to make. In this instance, it is a simple case of cutting out those unnecessary expenses.

This first step is imperative because you cannot reasonably expect to make a dent in your debts if you have not first cut your spending. Cut your spending, and you can then start to look into reducing your debt.

Check Your Accounts

It is now time to check your bank accounts to ensure that you have the best deal possible. This stage of the journey is important for similar reasons to the first stage. Just as you need to reduce your spending to be able to make a difference to your debt, so do you need to stop giving money to banks needlessly. Many bank accounts take money from you without you even noticing it.

Firstly, if you have an account which charges a monthly fee just for having it - switch banks. These days, there is no reason at all to have an account which charges you money for no reason. Shop around and find one which is better suited to your purposes. With a little effort, you should be able to find an account with an introductory interest rate. These are ideal for raking in a little extra cash.

Also, ensure that you avoid overdrafts like the plague. Overdrafts are a way of borrowing money which can easily get out of hand. It is best to steer well clear. Another good tip to consider at this stage is to transfer your credit card balance. Transferring to another bank offering a 0% interest offer can save you a tremendous amount of money on your repayments.

Prioritise Your Debts

Now that you have started to get your everyday finances in order, it is time to take a look at your debts. Everybody’s situation is a little different, so nobody really knows as well as you do what your debt is like. However, it is advisable to prioritise your debts before you start repaying them. There is little use, after all, in paying your debts off in the wrong order. You may as well pay as little interest as possible, and therefore have less to pay back overall. The first thing to mention here is that if you have any debts which have caused a court action to be issued to you, deal with those first. This should be obvious, but it is worth saying. Beyond that, it is a case of deciding which debts are most important. Priority debts include things like: mortgage and rent, tax, energy bills, and court fines. You should pay these off first to avoid any strong reactions.

After that, it is a matter of taking care of those debts which are costing you the most. Credit cards, overdrafts, loans - all these need taking care of in due course.

If All Else Fails

There are alternative routes to take if you decide that you cannot repay all of your debts. This should be considered a last resort, but it’s good to know it is there if needed. Filing for bankruptcy is a route you can take to avoid harsher penalties for not paying fines. Bankruptcy offers the honest debtor an opportunity to start afresh with their financial life. If you do choose to do this, then bear in mind that you will require a top-rate attorney. Contact Ronald D. Weiss Law Office for further information on bankruptcy as a viable option.

Start Saving

As soon as you have begun paying off your debts, you should also start putting some money aside. This is a sensible step to take for a number of reasons. Most of all, it acts as necessary security against any future debts. If you do fall into the debt trap again in the future, then having savings to pay them off with is a huge boon. Hopefully, you won’t need to do that. In that case, you can use your savings for that much-deserved holiday!

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