Coming to Terms With Debt

When you’re faced with mounting debt problems making that first step to regain control of your finances is often the most difficult part of the whole process.

It’s similar to getting up in a morning, it hurts, it doesn’t get any easier and you have to live with it every day, but within a few minutes you’re awake and ready for the day ahead.

Dealing with debt can be similar, it needs to be managed every, needs to be worked work at, but once you’ve made those first steps it gets easier.

With this in mind we’ve decided to explain what you should do when you’re coming to terms with debt.

It doesn’t matter why or how you’ve landed yourself in debt, there will come a time when you think enough is enough and it’s time for a change.

Unfortunately it’s not something that can be done overnight as you’re usually at the mercy of others as to how quickly you can begin clearing your debts. Whether that’s waiting for your next pay check, negotiating with creditors or dealing with a debt management company – these things can take time.

Therefore, the first thing you should do is prepare for what’s ahead. Set aside a few hours one day and lock yourself away in a quiet room. Arm yourself with enough tea and biscuits to sink a ship, a calculator, your bank statements, a computer and take those first steps to becoming debt free.

To begin with you will need to calculate exactly how much you owe and who you owe this money to. This allows you to build up a picture of exactly what you’re dealing with.

Most people find it useful to create a spreadsheet or list of what they owe as you need to know:

  • who you owe money to
  • how much you owe
  • the current interest rate
  • your current monthly repayment

If you can work it out, or know the figures, it’s worthwhile stating when each debt will be paid off and the total amount that you’ll have to repay, including any interest.

Once this spreadsheet is complete you should have a clearer indication as to the amount of debt you’re facing. Don’t worry if your debts seem unmanageable, no debt problem is too great to fix.

You’re next task is to work out your monthly income and expenditure. Again a spreadsheet or notepad can help as you’ll need list all of the following:

  • the money coming into your accounts including your monthly pay and any benefits or other income you receive
  • your monthly direct debits including utility bills, council tax, TV, broadband and mobile subscriptions and anything else you may have
  • any other regular expenditure spent on essentials such as the weekly shop and fuel for any vehicles you have
  • the current repayments you are making on your debts (if you’re currently defaulting on payments you still need to include the amount that you should be paying)

Once you’ve done this simply subtract your expenditure from your income.

Ideally the figure you’ll be left with is positive. If this is the case then you’re able to tackle you’re debt yourself. You may want to take out a consolidation loan to make your debt more manageable, but in general, with a lot of hard work you can deal with your debt head on.

Unfortunately, many people will find that the number they’re left with is negative. This means that you don’t have enough money coming in to repay all of your debts and continue living the lifestyle you currently have – something has to change.

If you’ve found yourself in this situation and have mounting debts a professional debt solutions company could help.

These firms have been created to help people like you. They offer simple, professional advice and can provide financial products that make your debt more manageable.

Remember, no matter how large your debt is there is always help available. You just need to ask for it.

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