More and more people everyday are finding out how easy it can be to slip into debt problems. Bankruptcies and IVA's are on the increase and the debt problem is getting worse.
People who end up having to resort to bankruptcy go through a traumatic procedure the effects of which often last longer longer than you would initially expect as the black mark holds on your credit file for years to come and ends up following you around in all sorts of Situations.
Many people who have become trapped with large debts will find that bankruptcy is their only option and if that is the case, you should face it head on. For most though, options may still exist. If this is the case for you, it is important that you take action as soon as possible.
One of the big causes of the debt problem for many people is credit cards. Excessive spending on credit cards along with only paying the minimum balance each month is a sure fire way to spiral into defect and deeper debt.
It seems to be almost the norm in our culture to think that we are owed something and that we should be able to get the things that we want as soon as we want it. The banks and credit card companies have spent allot of money trying to convince us of this. That way, they can keep us owed them money and working for them forever!
All is not lost though, for most people, if you take action now, you can probably still fix the problem and start living a debt free life!
Tip 1. Take stock of where you are.
The first step is to make a list of exactly where you are, so write down all of your debts and monthly payments as well as totals outstanding and interest rates. This simple exercise will make everything much easier as you go on.
Tip 2. Work out which debts to focus on.
One good strategy is to only pay the minimum payments on all of your debts except one which you deem to be the most pressing. (Normally the one with the highest interest but it could also be pressing for other reasons.) You pay as much as you can to that one until it is paid off then you add the payments for that one to the next most pressing debt. This can significantly shorten the amount of time it takes to get out of debt.
Tip 3. Destroy your Credit Cards.
While you still have your credit cards, there is always a chance that you will use them. No matter how strong you think you are, there may come a time when you are weak and will use them. If you do not have them then you can not, so get rid of them! Do not forget to cancel them with the issuer when you have paid them off otherwise it will still show on your file as available credit.
Tip 4. Take the time to examine your Credit report.
You can get a copy of your credit report from a number of sources online now. Most of these services will also send you alerts when it is updated. This can help you stay on top of identity theft. The most important reason to check it out though is to make sure that you have no black marks on it.
Tip 5. Write down and stick to a budget.
When you stick to a budget, it fills you with confidence that you can make a positive change and break free of your debt trouble. It also makes it much more likely that you will because you know that you are working everyday towards improving your situation.
Tip 6. Think carefully before switching loans.
More specifically, if you are thinking of switching from unsecured debt to secured debt (secured on your house for example) then think very carefully about it. You should only ever do this as a last resort as this will up the severity of the possible consequences for you.
Tip 7. Help is available, take advantage of it.
Do not face this problem alone. There are debt charities and non-profit organizations that can offer you advice and an understanding ear so before you take any drastic action or sign up for anything drastic, take the time to hear what they have to say. You may be surprised.