Facing a debt crisis can feel like the end of the world. With money tight,
making ends meet can seem hard enough without having to juggle your finances
and with debt consolidation loans and credit cards among the ideas people might
consider, choosing the right option to tackle your problems can be a minefield
in itself. However, with the right debt advice you can find solutions to
rediscover financial stability.
At moneysupermarket.com we want to help you find your feet, which is why we
have joined forces with Nick Lord, who has more than 20 years experience
advising on debt issues including 10yrs as the manager of a specialist money
advice unit at the Citizens Advice Bureau, to produce an exclusive guide to
debt crisis to help you get out of debt. In this guide Nick, who regularly
offers advice on Radio Four's Moneybox programme, will talk you through debt
management, look at the pros and cons of debt consolidation and insolvency
options and help you get back on your financial feet.
Use our quick links to skip to other sections of this guide:
Advice on Debt Crisis by Nick Lord
There's no hard and fast rule that tells you if your level of debt is a
problem. Some people lose sleep over a £100 bank overdraft; others happily
juggle credit card and personal loan debt that totals tens of thousands.
But some indications that you do have a debt problem include:
-
You can only afford to make minimum payments on your credit card repayments;
-
Your total level of debt has increased over the last few years and you can't
fully understand or explain where the money has gone;
-
You regularly don't have enough money in your bank account to pay for your
rent, mortgage, council tax, utility, or housekeeping costs;
-
Your list of income and expenditure shows that you have more going out than
coming in.
Dealing with debt problems
There are four main options for dealing with debt. But before you jump to these, it is important that you work through two initial areas. First, can you increase your income; second, can you reduce your spending?
Can you increase your income?
Bringing in extra money will obviously give you extra options to cope with your debt. Check whether:
-
You are claiming your full entitlement to social security benefits and tax
credits;
-
You are paying the correct tax code and claiming any tax relief that you are
entitled to;
-
You can work additional hours or take on a part time job to increase your
income;
-
You have any unwanted items that you can sell to provide extra money.
Can you reduce your spending?
Reducing your spending will also give you extra options to cope with your debt. You should look at two areas:
-
Can you reduce your spending on your mortgage, insurance, and utility costs.
Use the comparison facility provided on the moneysupermarket.com website to
help you find savings;
-
Can you reduce your regular spending in areas such as housekeeping, clothing,
and other personal spending? The trick here is to keep a diary for a few weeks
in which you write down everything that you spend. Very quickly this will give
you an excellent detailed summary of where your money is going and may suggest
where you can make savings.
