Are your finances worrying you? Have you been dipping into your savings (what savings I hear you cry!) or arranged an overdraft to finance regular outgoings recently?
The cost of living is increasing all the time at the moment. Our salaries never seem to rise at a similar rate. Sometimes our salaries go down too, if there aren’t enough jobs to go around. If you are changing jobs because your contract isn’t being renewed or you are facing redundancy and throwing that all into the mix, eek! It’s what I call an employers’ market. A bit like a buyers’ market when it comes to housing. You know, too many houses for sale and not enough buyers around so house prices can be lowered to secure a sale.
Seriously though. Now is the time to take action and make a plan to deal with your debts. Don’t ignore the problem and make it worse. Reviewing your outgoings and existing credit agreements regularly is really important. But, you need to be realistic and honest about how much debt you owe. Always work to pay off the most expensive borrowing first.
Take Stock Of Your Debts
Confirm the balances of all your bank accounts, credit cards, loans and other debts and find out the rate of interest you’re being charged on each. It helps to write this all down either in a spreadsheet like Excel
or even handwritten on paper which you can draw your own lines on, if that helps.
The point of this exercise is to get a realistic view of your finances, to enable you to identify what needs to change. Good or bad, once you know where you stand, you are then in a position to do something about it.
If you are finding it a challenge to stay on top of multiple monthly repayments. Then a debt consolidation loan may help you simplify your payments.
What Is Debt Consolidation?
Debt consolidation is when you move all or some of your existing debt from multiple providers (e.g. credit cards, store cards and loans) to just one monthly payment. To do this, the new loan (or credit) would allow you to pay off and ideally close, your old accounts. Your debt won’t magically disappear, but it will all be in one place. You can find out more information about debt consolidation here.
Why Consolidate Debt?
Although it’s not suitable for everyone. Some of the benefits of consolidating your debt with a loan are:
- Easier budgeting. Instead of and juggling multiple payments, you’ll make one set monthly payment on the same date each month.
- A clearer view or understanding of your debt. Having all your debt in one place can make it easier to see how much you owe and how quickly you’re paying it off.
- Potentially reducing the interest you pay as your loan rate may be lower than some of the more costly, higher rate store or credit cards you are looking to pay off with the new loan.
How Does It Work?
Firstly, you’ll need to work out what you owe. Look at all existing debts so you can calculate how much you would need to borrow to cover that amount.
Then, once you have the loan you will need to pay off all those existing debts you listed previously.
And finally, once you’ve paid off those existing debts you will have just the one repayment to make each month on the consolidation loan within the set repayment term
Help And Advice
If your debt is worrying you and you are not eligible for a debt consolidation loan or don’t want a debt consolidation loan then please speak to a debt charity such as Step Change, National Debt Line or Citizens Advice. As I said at the beginning of this post, don’t ignore the problem. The sooner it is managed the better you will feel.