The old saying goes: size isn’t everything, and as far as debt is concerned it really isn’t. The size of your debt is never the problem. The problem is the ratio of your debt in comparison to what you earn. If your debt repayments are larger than what you have coming in then you have a problem and it is a problem that spirals downwards and out of control.
Can you manage your debt?
If your debt is manageable and you know why you have incurred it, you are better off than most people. Over 9 million people in Britain today are in debt and most of them do not ask for help. If you know that you are paying off for example a car or mortgage and you have budgeted for it then you should be able to manage it, however if you are not sure how you got into debt and you can’t cover your costs each month leading you to borrow more, that debt will sweep through your life like a tornado destroying everything in its path. Here is how the spiral works:
- You are spending money faster than you are earning it
- So you are taking out loans
- More of your earning have to go into paying back the debt
- You keep on taking out credit to support your lifestyle
- You end up with nothing as everything you have goes to trying to pay back your debt.
What do you do about your debt problems? First of all in order to stop the tornado of debt you have to stop borrowing to pay for it. Never take out more credit to pay for debt. It is basically throwing more wood on the fire. There are many ways to take a big step to financial health but this involves you being proactive. Studies show that many people become depressed and sick over debt, tending to hide their head in the sand hoping the problem will go away. The problem will go away if you take a good look at the following list and take the steps:
- Sort out your spending. Make a budget and try to cut back, remove any luxuries and items in your lifestyle that are non-essential
- Check your yearly income and find out if you are entitled to any benefits or grants.
- Reclaim and get cashback where ever possible
- Shop around for the cheapest credit on cards and bank accounts. Look into credit unions.
- Pay back more than the minimum on your credit card every month. This is essential as the interest will kill you.
The next step to take is vital and one that should not be ignored under any circumstances
Ask for debt help!
There are many charity organizations that will help you with debt management. These organizations will mediate on your behalf with your creditors. You can also approach your creditors on your own. It is much better to put your problem on the table than to let grow in the darkness.
If you feel ashamed or depressed over your financial problems, remember that you are one of millions who are mired in debt. Be one of those who gets out of debt.