If looking at tips to beat debt, this should always be the starting point, especially for someone struggling with debt. Looking to make changes so that there is light at the end of the tunnel. So to begin, gather together as much information as you can, so you are in a position to make the right decisions. It will also help you decide whether you can resolve your debt problems by yourself, or if you would be better served by seeking professional financial advice.
It is essential that you sit down and list all your income and all your outgoings so that you can begin to plan to cut your debt. The key of course is whether those outgoings can be trimmed. Either way, by listing all your financial commitments, you get a clear understanding of how serious the problem is.
It is always a good idea to get an up-to-date record of your credit report. Your credit file will report all of your credit agreements, tell you your credit rating and inform you of any missed or late payments, and thus will give you an idea of whether you are likely to be accepted for credit in the near-future. It also allows you the opportunity to correct any mistakes on the file.
You should be able to gain a free report for a trial period from at least one of the major Credit Reference Agencies. Try visiting www.experian.co.uk, www.callcredit.co.uk or www.equifax.co.uk for more information.
We have a full section of the website dedicated to financial advice – see our credit reports page as an example.
An obvious course of action, but often easier said than done. It is important that you grade your debts, and prioritise them in the order that they need to be paid off. The same applies for all your monthly payments. For example, if you are a homeowner, then any mortgage payments should be your absolute priority. If not, your rent payments should be). A roof over your head is a necessity.
After that? Look to pay off important other bills such as council tax, other taxes, utility bills, fines. Deal with any county court judgments and any child maintenance payments.
If you feel you are not in a position to pay your priority debts, then contact the relevant lenders/organisations. See if there is a solution to your problem, such as a restructured repayment plan. Alternatively, speak to one of our debt experts. Check if a restructuring of your unsecured debt repayments, such as credit cards or loans, is feasible. This could free up more money to pay your priority debts off each month. Lenders are not obliged to accept repayment restructuring, but it is often in their interests to do so. Do note however that such a plan may well affect your credit rating.
Save money by spending less! Well if only it was that easy, but what is achievable is taking a close look at what you spend each month, and how you spend it. Cut back on credit card spending, especially if it has replaced purchases that used to be made with cash. It is all too easy to spend on credit cards and then let a big balance build up that will attract fees and interest rates if not paid off in time.
If you are struggling financially, it is always worth checking that you are receiving all the money you are entitled to, especially if you are on a low income or out of work. Information on Income Support, Working Family Tax Credits, Jobseekers Allowance, Universal Credit and more is available on www.directgov.co.uk. For details on benefits go to www.hmrc.gov.uk, or visit www.entitledto.com for more information on tax credits, and to see what extra money you may be able to claim for. For any help with rent or Council Tax, contact your local council.