Whilst it might appear on the surface we’re starting to recover from the financial disasters of the last few years the reality is many of us are still struggling. For many of us getting all our expenses paid each month with the money that we have coming in just isn’t possible, you borrow more money to pay off what you already own then the interest from that leaves you having to pay even more.
If you take control of your debts early on it’s much easier to manage but this can be easier said than done. Here are 3 of the more common ways people fall into debt and how to recover from them.
You’ve spent all month eyeing up that top or pair of shoes in your favourite store – finally its pay day and you can actually afford to treat yourself. This isn’t a problem; providing you can actually afford it. It can be so tempting when you get to the check out and you’re told you can save some money off your purchase or even better don’t have to pay anything straight away if you take a store card but it’s not beneficial in the long run.
Typically the interest on a store card will be higher than a credit card and in most cases any initial savings will soon be eaten away by crippling charges. If you can’t afford it now the chances are you won’t be able to afford it next month either so just leave it.
If you’ve already got store cards they need to be paid off as a point of priority which is often easier said than done but in the mean time cut it up so you can’t make the damage any worse. If you are managing to pay it off consistently each month try paying the debt off with a new credit card that offers interest free credit for the first few months to stop the interest getting any worse.
In this day and age credit cards are almost essential, they’re safer for online shopping and often come with automatic insurance should they get lost, stolen or cloned. This doesn’t mean you should be dependent on them though. Your primary card needs to be your main account debit card so you’re only spending the money you actually own. Keep one credit card that you only use in emergencies, if something goes wrong with the car or the kids kick a football through the kitchen window. Things like these would need to be fixed immediately and can’t wait for pay day but you need to make sure you tighten your belt for the next few months to get them paid off right away.
If you’re struggling with credit card debt or you have several credit cards you need to face the situation head on. Maxing each one out then applying for another one is only going to make the situation (not to mention your credit rating) worse. Shop around for the best value loan you can find and get everything transferred over to one monthly repayment and cut them all up.
Pay Day Loans
The last few years have seen an infestation of pay day loans and they’re advertised everywhere, television, magazines and radio. A payday loan differs from a regular loan as they offer a much smaller sum of cash, they offer it immediately and they charge a crippling level of interest to a point where they’re constantly being investigated for fair trading. To make matters worse these lenders make even more money from selling your data on so you’re being targeted with adverts offering you even more cash.
This is the worst loan you can take out and before you even consider this you have to talk to a free and impartial debt management service, services like Citizens advice, National Debtline and PayPlan can all help you manage your debt and stop the problem getting any worse.
The worst thing you can do with any debt problem is ignore it, it isn’t going to go away, your lenders aren’t going to forget you own them money and the chances of you actually winning the lottery are not big enough for you to pin all your hopes on.
Look at everything head on, know exactly how much money you own and where you owe it, look at your current outgoings and work out what can be cut or where you can make some extra cash. Can you get a part time job? Can you pick up more hours at your current job? Do you really need a takeaway or a night down the pub every week? Find something you can cut and start cutting.
If your money problems have got to the point where you think you’re in real trouble it’s vital you seek debt advice right away from trained professionals.
Jessica writes for Crawley solicitors Bennett Griffin who offer financial and personal law.
- Five Practices That Hurt Your Credit Score (fastswings.blogspot.com)
- How To Get Out Of Holiday Debt (Christmas2010Shop.com)