By Lorena Benchis
DIY approach to reducing debt Having outstanding debts is not usually a comfortable position to be in and the greater the debt that you owe, the worse it makes you feel. Debt is often the cause of anxiety and sleepless nights and can lead to depression.
The worst thing you can do about debt is nothing. The ostrich mentality where you bury your head in the sand and pretend it’s not happening isn’t going to help matters, and interest that you owe will continue to stack up each time you miss a payment.
The best thing to do when you are in debt is to find a way out of it. There is always a solution, and it depends on your personal circumstances how you can best deal with it.
If the debt you have is not insurmountable, you can put your own debt management plan into action. Draw up a list of all those debts that you have, and prioritize them according to the consequences of not paying them. For instance, not paying your mortgage could risk your home, not paying rent could get you evicted, but credit card debt – though serious – is not going to put the roof over your head at risk.
You should tackle paying the priority debts first, and the non-priority debts can take second place. However, it’s a good idea to talk to all your creditors to explain that you are having difficulty keeping up with payments and to see if you can negotiate a freeze on interest charges or a different repayment schedule. Work out a strict budget and try to stick to it. It sounds simplistic, but if you can spend less than you earn, you’ll gradually get back on track.
When looking at your expenditure, see if there’s anywhere you can make savings. This may mean switching utility provider, changing insurance broker or moving your mortgage – look into what deals are out there and take advantage of them. Even if the savings are comparatively small they all add up.
Of course, you may feel that you’re so deep in debt that you can’t see a way out. It may be that you need to seek professional advice. There are many debt management companies which can offer a debt management plan or a debt consolidation loan – where you take out a loan to pay off all your existing debts, but then only have one monthly repayment to make. The debt management company charges a fee for its services, but for people who are floundering in a debt situation, buying in professional help can be the only way to a positive resolution.