Struggling With Debt? This Is Your Action Plan To Get Back On Track

Mon, Feb 3, 2014

Financial Advice

Surely, no one looks forward to being in debt and we all know it’s something we’d rather avoid if possible. What you may not be aware of though is just how being in debt can have a big an impact on your life and how it can affect your mood and even your self-esteem. Being in debt can also create a lot of stress and the walls almost seem to be closing in on you.

Finding yourself in debt then is incredibly stressful, but it’s no good burying your head in the sand and hoping it will all go away. If you want to get back on track, you need to put your worries to one side and get proactive. In this article, you’ll find a complete plan for getting your finances back on track and for steadily climbing your way back out of debt.


Admit You Have a Problem

As with any problem that only you can solve, the first step is to acknowledge that there is a problem and to come clean not only with yourself, but also with your friends and family. According to ThisIsMoney.co.uk, over a third of people in debt will hide the fact from their partners and it’s not a stretch to presume that this extends to family and others.

Of course, this won’t help you when it comes to getting back in the black, as your friends could have useful advice or even be able to help you financially.
Speak to Your Lenders and Financial Institutions

You’ve come clean with your mum and your partner, and now it’s time to come clean with your bank managers and lenders. If you discuss with your lenders that you’re having trouble paying back your debts, you may find that they can help you to restructure your repayment plan, or even reduce or freeze the interest you have to pay. This is actually in their best interests, because of course it’s better for them that you are able to pay the amount and that you don’t go bankrupt.

If your lenders aren’t willing to compromise about the interest rates and repayments, then you should consider using professional debt restructuring services. The debt restructuring service will contact your financial institutions, on your behalf, and will negotiate easier terms for you. However, do remember that debt restructuring in no way helps you reduce the amount of debt you have and should only be considered as a last resort.


Your Income and Overheads

You can talk to your employer and explain your situation; you may find that your company is willing to help you. Failing that, there are many other ways you can increase your income. Look into taking on additional work moonlighting, with part-time employment or even working online. Now isn’t a time to try out new and risky ventures though – look into easy and straightforward ways to make real money.

Likewise, you should look into curbing unnecessary expenses. Things like premium TV channels or magazine subscriptions are things that should be saved for when you’re financially stable. Also, switching utility providers can result in big savings.


Debt Management

Next, you should seek out advice from a debt management company or a financial advisor. Getting debt management means getting advice and consultation to help you choose which of these strategies is best for you and that can make a big difference to your situation. It is worth noting though that the moment you decide to consolidate your debt, it has a drastic effect on your credit rating. You may be able to pay off you debts more quickly, but you will also have to work extra hard to build your credit rating back up.


Budget

Creating a budget means setting aside specific amounts of money that you can spend on each area of your life. For instance, you may have a food budget and a budget for gifts and treats. To help you with sticking to the budget, you should keep a cash book or use an app such as GetLiquid. Better yet, you can also set up direct debits between your various accounts which will help to ensure you literally can’t go over budget and that you don’t miss any more repayments.


Dedication

With all these changes in place, it’s now time to knuckle down and get to work by sticking to the plan. The trick here is not to think about the big picture, which will only serve to get you down and which you can do nothing about in the short term. Once you’ve made your plans, your only concern should be sticking with it, staying within budget, and making sure your repayments are made on time. This way, before you know it, you’ll find that your situation will take care of itself.

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This article is authored by Yorrick, a freelancer currently writing for Bentham IMF, providers of commercial litigation funding. A culinary enthusiast, he enjoys cooking for his family on weekends.

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