If you find yourself regularly dipping into your overdraft or piling up debt on a credit card, then it’s time to consider addressing your finances.
Sorting out your debt problem may seem like a minefield, but making some simple changes to your cash flow will help you manage your money better, both now, and in the long run.
We’ve compiled a few easy steps which will help bring a bit of control back to your spending habits.
Assess your situation
The starting point is to work out exactly how much you owe, who you owe it to, and what you spend on a monthly basis.
Sit and write it all down – yes, every penny. This is a very important step and starting point for sorting out your finances. Getting it all down on paper gives a clearer picture.
Draw up a budget
Once you’ve worked out what is owed and your monthly outgoings, you can draw up a budget. Start with the essential monthly bills and work you way down to spending money. Be realistic about what you can afford to repay and stick to it.
Stick to your plan
Don’t take on any more debt until you’ve repaid what you already owe.
Organise your bills
Check whether your utility bills are up for renewal. Switching suppliers is easy and can save you hundreds of pounds a year. Ensure you’ve got direct debits set up for paying all your utility bills to avoid any late payment fees. You may also be entitled to a discount for doing so.
Organise your credit card debt
Have a look at switching to a new credit card with 0% interest – but remember to cut up your old one. This will ensure any payments you make are eating into the debt and not the interest. Be careful to watch out for balance transfer fees. Any special offers will run out after the initial offer period has expired so make a date in your diary a month beforehand to switch cards again. When shopping take cash instead, you’ll make better decisions on what you can really afford with money in your hand.
Switch car insurers
Never opt to automatically renew your car insurance with the same firm. Switching car insurers is one of the best ways to save money as rates can often soar if you opt to renew automatically at the end of the cover period.
Get rid of store cards
Store cards have some of the highest interest rates for credit. Cut up the cards to avoid using them further and transfer the debt onto an interest free credit card.
Shop around for your bank account
Check what deal you are getting on your overdraft and interest rates. By shopping around (try one of the online comparison sites), you may find a better deal elsewhere. Some banks offer cash back for switching your bank account to them, but be aware of any monthly fees.
Switch mortgage
Are you getting the best possible deal? Your mortgage may have been purchased several years ago and switching to a different supplier could reduce interest rates dramatically. Take into consideration any transfer charges and legal fees that maybe incurred. It may well be worth talking to an independent financial adviser who will be able to look at options for you.
Get advice
Sorting out your finances can be a daunting prospect, so it can be helpful to seek advice. Your local Citizens Advice bureau (Link Here) or Money Advice Service (Link Here) will be able to give you information on debt problems including mortgage and rent arrears as well as advice with banking, budgeting and sorting out debt.
