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AD. Being in debt can be crippling. I know – I’ve been there. Back in 2013/4, I wasn’t the best with money. I had some debts, and I was also in the habit of just buying things whenever I wanted, without really thinking about the consequences. I was able to work hard, making money online, and that was what really turned my situation around. Since then I have been able to put £50,000 in my premium bonds and save enough money for us to buy a house later this year. Today I want to talk to you about the different ways to deal with your debt.
Make yourself more money
For me personally, this was the way that I dealt with debt. I worked really hard to make and save money online. I started completing surveys, getting paid to evaluate websites and more. Also, when I had got out of debt I started matched betting to ensure that we had a better quality of life and could begin building up our savings pot.
Save yourself more money
As well as working on making money I also worked harder on saving more money. I began batch cooking, meal planning and followed these money-saving tips. This helped me to look after every single pound I earned the best I could. I also made sure to check we weren’t overpaying for car insurance, energy bills or life insurance. This all made a BIG difference to our monthly outgoings and meant that we have extra money for clearing debt.
Ask the bank of Mum and Dad for a loan
If your parents are in a position to help financially then you could ask them for a loan. While this isn’t going to be great for your self-esteem it may mean that you can be free of interest repayments. Also, your parents may not be in quite such a hurry for their money back. This will allow you to make smaller payments while working on budgeting and avoiding future debt.
Consolidate your debt
If you have a lot of debt in different areas, credit cards, loans, car finance etc, it may be an idea to look at consolidating your debt. With low-interest loans available from Sainsburys Bank, and similar, the savings could be quite considerable. Ensure that you can make overpayments and don’t stretch yourself with your monthly loan repayment.
Get a 0% credit card deal
We always keep a 0% credit card on hand for emergencies. This is ideal for us as it allows us to have a spare card to fall back on and if we have an emergency we don’t pay any interest. These days we have an emergency fund and lots of savings, but I still keep one just in case. I’ve used it a couple of times in the past to help others out, although this maybe isn’t the best idea if you’re already in debt!
Look at an IVA
If your situation is pretty dire, and you are struggling financially then consider getting IVA Help & Advice. An IVA (individual voluntary agreement) is something that typically lasts 5-6 years and is an alternative to a debt management plan. As a rough guide you’ll be expected to make payments for 5-6 years each month and at the end of the IVA your debts are written off.
Consider a debt management plan
A DMP (debt management plan) is the process of creditors being asked to freeze interest. If you are only paying the minimum payment off your debt each month then it is likely that your debt is rising, not falling. This is where a DMP can be useful, however, be advised that people can pay into these for literally years – I’ve heard of as many as 20 years! Read this post comparing IVAs and DMPs if you want more information.
Declare yourself bankrupt
Bankruptcy is over much quicker than an IVA or DMP and for the majority of people, 7/8, they won’t even have to make ANY payments at all. Also, bankruptcy cannot fail! This doesn’t mean it should be taken lightly but you can apply to become bankrupt if you can’t pay your debts.