Debtbusting Made Simple (Part 1)

As anyone who has read the news recently will realise, more and more people are becoming burdened with serious debt problems. In 2006, over 3,000 people went bankrupt owing more than £100,000 in unsecured loans – and that figure is spiraling rapidly upwards this year. Britons are now in debt by up to £1 trillion pounds and this debt mountain is fuelled by personal loans, store cards and credit cards.

If you feel concerned that your finances are out of control, we are here to help. Listed below are two points to help get your finances in order again, and hopefully a path to steering clear of mounting debt problems.

Address the Problem

This is probably the hardest step. Face facts and work out exactly the extent of your debts. Write down all your debts and work out what interest rates you are paying for each one, so you can identify which one you should tackle first.

Be honest with yourself. Is it a one-off purchase that has created the debt? Or do you frequently spend more than you earn? If so, you are probably using overdrafts and credit cards to fill the gap. Otherwise, maybe a change in circumstance such as divorce, unemployment or change of career is at the root of the problem.

Reduce interest costs

Shop around for cheaper credit, for example a low cost personal loan. Alternatively, you could search for a zero percent credit card to pay off the more expensive debts – but on NO account, should this card be used. If you take a loan out to pay off a credit card, ALWAYS cut up the card so temptation is removed.

In my next article Debtbusting Made Simple (part two) you will find the final three points to really get you back on the road again.