As more Brits get into debt, moneysupermarket.com loan expert Paul Wilson offers seven great tips on how to reduce it and the best approach to dealing with your debt problems...
Video Transcript
Hi, my names Paul Wilson, and today I'm going to talk about the subject of debt, and a few quick tips to help you manage it.
TIP 1
My first quick tip then to get out of debt is probably the most important one, and I've put it ahead of all the other things we are going to talk about today, and that is 'Don't Ignore It'.
In situations like this it's very easy to bury your head in the sand and hope things will go away. So the starting point is to add up all your debts. Be honest here, make sure you get everything written down on paper - know exactly where you stand and how much debt you have to repay.
TIP 2
So once you have a handle on the level of debt, then the next thing to do is to separate and prioritise all the bills that you're paying, and make sure you put essential bills first. So for things like your mortgage or your rent these need to go to the top of the list. These would be followed by utility bills, council tax, all those essential items you have to pay every month, and then further down the list will be your sort of standard luxury items, so perhaps that Sky direct debit, or any magazine subscriptions.
TIP 3
The third point is to go and talk to your creditors - the budget you've just compiled will be a big part of this. The point here is that your creditors and the banks out there will be more receptive to you if you go to them and approach them for help, as opposed for them having to chase you and pursue you for payment.
TIP 4
The fourth tip you can think about is whether you can start saving any money, so just because someone's got into financial difficulties it doesn't mean that they can't switch financial products, and make some savings by moving to the cheaper products.
So, for example, if you've got a credit card balance or a store card, or something that you're paying interest on at the moment, can you flip that into a 0% balance transfer credit card?
Likewise on a mortgage, if you're currently on the standard variable rate (SVR) the chances are that there's a product out there which you can switch to and make a saving each month on.
TIP 5
The fifth tip is to look at whether you can reduce daily spending, so it might seem a bit obvious but are there non-essential items you can cut down on? Now these are the boring, mundane things we don't like to think about. For example, taking lunch to work every day instead of going out and buying it, cutting down on the number of newspapers / magazines that we buy may seem very small things but they can have a really big impact.
TIP 6
Tip number 6 won't apply to everybody, but for some it may be easy to make some additional money, so a quick example here might be by selling things that you no longer need or use. Sites such as Ebay have made it very easy for us to sell on items that we no longer want. Another quick idea here is that could you take on some sort of part-time work, and help you get a little bit more cash coming into your finances that way.
TIP 7
The final tip is probably one of the most useful, and that's to seek out some independent and free advice. There are two main sources out there for debt: the first one is the CAB, which is the Citizens Advice Bureau and the second one is the CCCS, which is the Consumer Credit Counselling Service. Now at the start of the blog I mentioned that people that are having debt problems aren't alone out there, and in fact the CAB today will speak to more than 6,600 people with debt related queries.
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Thanks for your time, and thanks for listening today. These seven quick tips have very much been geared at easing debt problems out there and debt issues you might be having. In the next video blogs we will be looking at more debt related / specific products, so will be starting to look at things like IVAs, Debt Management, Bankruptcy, and products such as Debt Consolidation loans, so please keep your eyes open and look out for those.
