Debt Management Tips to Get Things Under Control
- 16 Nov 2021
Want to get your finances back into control and manage them to a better degree – here are some tips to do so.
Review Your Finances
Once you decide to get serious about your finances, you need to review your finances. Review your current finances to know if you can handle it yourself. In some cases, you may need an expert to help you with your finances.
Create a Budget
You need to create a budget to help you understand your income and expenses. Once you create your budget, you will know where you stand. A debt expert can even help you create a budget.
Check Your Credit Score
Check your credit score. You want to make sure your credit score is correct. Credit Reference Agencies hold your credit file. These agencies document your credit agreements. So, your lenders should update your documents regularly.
If you have not made some payments or have County Court Judgements (CCJs), they will appear on your credit file. This can affect your credit score.
Manage Your Debts
If you have priority debts, you need to pay them off first.
Once you create your budget, you will know your debts. It is much better to pay off some debts first. For instance, if you are paying rent or mortgage, you need to pay them first. If you miss one of these payments, you are more likely to lose your house. You do not want to get kicked out of your house because you did not pay rent. If you need help managing your debts a debt management plan could be the answer. This can be a short term solution to help you get back on track with your finances. Read more here: How long does a debt management plan last?
Priority Debt Checklist
Loans secured against your house, including mortgage
VAT, tax, National Insurance, and council tax
Utilities – Water, gas, and electricity
Child maintenance, CCJs, and court fines
Hire Purchase agreements
If you know that you cannot pay some of your priority debts, you need to contact your lenders immediately.
It is better to talk to a debt expert. A debt expert can reduce your payments to some of your unsecured debts, including overdrafts, personal loans, and credit cards. Therefore, you will have enough money to pay off your priority debts.
If you reduce your payments, however, it can take longer to finish paying off your debts. However, some lenders might not agree to reduce your monthly repayments.
If you can budget your money, you can save more money. Saving money can help you pay off your finances quickly.
Do Not Rely on Credit
You need to know your expenses. It is much better to pay cash for some things. Do not use credit to purchase them. If you use credit, you may fail to pay your debt every month.
So, you need to know how long it takes to repay your debt. If you cannot repay your debt quickly, you must know the interest that the lender will add.
What Are You Entitled To?
You need all the help you can get if you want to pay off your debts. Therefore, you need to do some research to find what you are entitled to.
Tax Credits and Benefits
You can check the information on Jobseekers Allowance, Working Family Tax Credits, and Income Support on the internet.
Council Tax or Rent
You can get help with Council Tax or Rent. So, contact your local council for help.
In addition, you need to know if you have payment protection insurance on your credit cards, loans, or mortgage. If you cannot work because of illness or you are unemployed, you can file for a claim.
Get a Managed Account
If you miss a few payments, your debt can increase rapidly. This is because of charges and interest.
If you are sure that you will miss some payments, you can get a managed account with a budgeting service. You can use the account to separate your funds. Once you pay your bills, you can use the remaining money to pay off your debts.
Talk to an Expert
If you have debts, it can be tough to choose the right solution. This is because there are so many solutions. It can take you more time to pay off your debts on your own.
Do not just do some research. It is much better to get professional advice. A professional can recommend the best solution for you. They can help you pay off your debt quickly.
If you meet with an expert, the expert can tell you the pros and cons of the different solutions. Then, they explain the best solutions.
If you can understand your income and expenditure, you can reduce your expenditure. Reducing your expenditure can help you pay off your debts quickly. This is because you will have more money every month. You will just use the money to pay off your debts.