Being scared of debt

Debt doesn’t have to be scary.  There is plenty of help out there.  The main thing is to acknowledge how much debt you’re in, work out a plan, get some help if necessary and then do something about it. The inspiration for this post comes from a recent press release i read by Debt Free Direct – a UK debt help company.

Many people tried to hide their debt from their partners or even themselves, pretending they don’t have a problem.  Hiding bills and debt is not the answer.  It is important to acknowledge the problem and then try to deal with it.

First of all, add up everything you owe, then workout how much you can afford each month, taking into account all the normal outgoing like bills, mortgage, etc.  See if there’s anything you could cut down on – perhaps taking sandwiches to work, instead of buying lunch.  Then start with the largest debt first and pay as much as you can afford into that – this is called “snowballing”. 

Pay off the minimum on the other debts until you have rid yourself of the largest ones.  Then you can gradually chip away at the smaller ones.  Remember the larger the bill, the more interest you have to pay – so it’s important to reduce those large bills as soon as possible.

If your debts are out of control, then there is plenty of help available and it’s free.  The Citizens Advice Bureau is a good place to start.  They will advise you and put you in touch with other agencies if necessary.  Don’t be afraid or ashamed – they have plenty of experience in dealing with debt. 

Once out of debt, treat credit cards very carefully – ok you might need to pay for hotels and holidays.  But always think of a credit card as a “debt” card and act accordingly.  Never ever use a credit card for cash, even just to tide you over for a short time.  The interest rate on cash withdrawals is much higher.  Avoid at all costs.