Style Money Guides
Dump the Debt
So you've been a little heavy handed with the credit card, spent your savings plus a little bit more on that dream holiday, or simply let your cash flow get way out of control. It's high time you dumped that debt before things get out of hand so don't bury your head in the sand. Take stock, create a budget, prioritise your debts and, most importantly, talk to an expert.
Think Ahead
Debt is a serious problem but there are some straightforward solutions. First things first: take stock. How bad is the situation? Work out exactly what you owe and to whom. Prioritise your debts so if you can't pay them all off at once, you can clear up the most important ones first. For instance, if you owe money on a mortgage, don't stop paying this or you will end up homeless. Similarly, don't stop paying your heating or power bills. Payments to credit cards or store cards can go further down the list.
Budgeting and Cutting Costs
Create a budget so you know exactly how much you are spending and how much income you have. The best way to do this is to write down all your fixed monthly costs (such as mortgage, heating and electricity bills, council tax), work out what you spend every month on non-fixed costs (such as your car, TV license, mobile phone) and then find out how much you have left (to spend on food, drink, going out, clothes, gifts etc). Don't forget, you'll also want to put aside a bit every month for holidays, Christmas and emergencies (repairs to the house, car, vets' bills etc). Some people find carrying around a little book with them for a month helps them remember all their expenses. It's amazing how many things you can find to spend your money on when you don't have any! For more advice on budgeting, see Balancing Act.
If you can, find savings and divert those to cover your essentials. Search the web for cheaper insurance, heating and gas suppliers or mobile phone companies and think about re-mortgaging your home (if you can find a better deal) as this could help you reduce your monthly outgoings. Websites that you can use to compare bank rates and accounts include Money Extra, the Which magazine website and Money Supermarket. That way, you can channel more cash into clearing your debt.
Most people in debt consider amalgamating their debts into one. This isn't necessarily a bad thing to do, providing you are making a real saving and the lender is reputable. You might want to look at a current account mortgage, for example, which can lump your bank account and debts together at one rate of interest. Use the web to compare interest rates on loans. And if you can, transfer any credit card balances to a card offering 0% interest on transferred balances. For more advice on borrowing, see Give Yourself Some Credit.
Debt is a serious problem but there are some straightforward solutions. First things first: take stock. How bad is the situation? Work out exactly what you owe and to whom. Prioritise your debts so if you can't pay them all off at once, you can clear up the most important ones first. For instance, if you owe money on a mortgage, don't stop paying this or you will end up homeless. Similarly, don't stop paying your heating or power bills. Payments to credit cards or store cards can go further down the list.
Budgeting and Cutting Costs
Create a budget so you know exactly how much you are spending and how much income you have. The best way to do this is to write down all your fixed monthly costs (such as mortgage, heating and electricity bills, council tax), work out what you spend every month on non-fixed costs (such as your car, TV license, mobile phone) and then find out how much you have left (to spend on food, drink, going out, clothes, gifts etc). Don't forget, you'll also want to put aside a bit every month for holidays, Christmas and emergencies (repairs to the house, car, vets' bills etc). Some people find carrying around a little book with them for a month helps them remember all their expenses. It's amazing how many things you can find to spend your money on when you don't have any! For more advice on budgeting, see Balancing Act.
If you can, find savings and divert those to cover your essentials. Search the web for cheaper insurance, heating and gas suppliers or mobile phone companies and think about re-mortgaging your home (if you can find a better deal) as this could help you reduce your monthly outgoings. Websites that you can use to compare bank rates and accounts include Money Extra, the Which magazine website and Money Supermarket. That way, you can channel more cash into clearing your debt.
Most people in debt consider amalgamating their debts into one. This isn't necessarily a bad thing to do, providing you are making a real saving and the lender is reputable. You might want to look at a current account mortgage, for example, which can lump your bank account and debts together at one rate of interest. Use the web to compare interest rates on loans. And if you can, transfer any credit card balances to a card offering 0% interest on transferred balances. For more advice on borrowing, see Give Yourself Some Credit.
