Getting out of personal debt can seem like a minefield. There is so much to consider, and there can seem like little reprieve while you are trying to make the right changes. But, that doesn’t mean that you have to live in a perpetual cycle of debt. Instead, it’s time to face up to your financial problems.
It’s time to put your money where your mouth is. It’s time to dig your way out of personal debt. Here is what happens next.
Making Sense of Your Finances
Now is the time to look at your finances. A simple budgeting tool can ensure that you are looking at your debts in a more detailed way. With a vast array of budgeting apps, you can have a simple method at your disposal to ensure that you are making sense of your money. So, look at your income. Look at your bills and outgoings. Now, look at your debt. How much can you reasonably afford to pay back? Are your debts significant in comparison to your income? Or, can you manage the debts that you have? These are significant questions that you must answer.
Changing Your Behaviour
Let’s face it; your debt behaviour can be modified. Cut up the plastic. Ditch the credit cards. Stop borrowing further. Changing your behaviour is imperative to your financial health. So, stop borrowing and start paying back what you owe. This is going to be a long process. But, making healthy changes to your attitude towards borrowing is the first and most important step.
IVAs, Debt Consolidation Loans and Bankruptcy
Of course, managing debt can be easier said than done. If you have found that your debts are overwhelming, it’s time to take more stringent action.
Debt consolidation loans can be beneficial if you need to make sense of your money. But, the interest rates of these types of loans can be higher. As such, it may mean that you need to investigate further into the rates of interest that you are paying.
IVAs, on the other hand, can be a robust tool for managing your finances. What’s more, an IVA company, such as Lines Henry, can ensure that you are paying back your debts over the course of a fixed period. This can be anything from three to six years depending on your debt amount. Furthermore, an IVA means that you cannot obtain further credit while you are paying back your loans to the IVA Company. As such, this can stop you from spiralling into a further cycle of debt.
Bankruptcy should be used as a last resort. But, if there is no way that you can physically pay back your debts, it may be a good idea to go down this route. This means that your debt is cleared. But, you will struggle to obtain further credit in the future. What’s more, you may find that your home is repossessed as well as other assets.
Talking to Your Creditors
Your creditors have seen problems like your own before. So, talk to them. This can be a savvy approach to take. If your debts are nominal but you are feeling the pinch, talking to your creditors can be a positive step to take. They may lower the interest rates or give you a payment break until you are back on your feet.