How to manage your debts may be an issue that is causing you sleepless nights. Even worse when you wake up the postman may bring unwelcome letters demanding money that you cannot afford. You will feel anxious and that emotional pain will ripple out to your other family members. The good news is that you can learn how to manage your debts effectively. There is debt management help and advice you can tap into.
Acknowledge the extent of the problem
Too many people who are struggling financially put their heads in the sand. Nothing will change unless you take action. Do not look at just the debt where the creditor is pushing you for money hardest. Acknowledge and record the full extent of your debts of whatever type. Write down the amounts you owe, the interest rates if any and the contact details for the creditors.
Work out your priority debts
When working out how to manage debt, you need to work out which debts are priority and which are non-priority. The way to do this is to find out the sanctions different creditors have available to them. For example, if you do not pay your rent or mortgage, you may end up losing your home making this a priority debt in most cases. Non priority debts are things like overdrafts, personal loans and credit card bills. Usually, if you contact your creditor, arrangements can be made to pay these off at an affordable rate over time.
Come up with a budget
Do you know how much you are spending and on what items of expenditure? If you don’t you cannot come up with a workable budget. So take some quiet time to list all the things you spend money on weekly or monthly. Include essential items such as housing costs, fuel costs, water bills, food and clothing. Be aware that you may need to curtail spending on socialising, cigarettes and other non-essential items. You can return to these when your debts are under control. Think about all the stress that will be relieved when you know you have a debt management plan in place.
Decide between self-help and seeking support
It is possible to help yourself when working out how to manage your debts. However, most people do not sort out their debt issues straightaway so tension has built up. You may feel better handing over your case to a professional money adviser.
Solutions to debt issues
There are a wide range of solutions to debt issues depending on your individual or family circumstances and the types of debt you have. Most people manage to come to an agreement with creditors where they are paying back but over a longer period than originally agreed. Other possibilities include debt relief orders, individual voluntary arrangements and bankruptcy.
It’s also important to note that things can and do get better. Keep the faith and seek support when you need it.