When you have got into debt, it can quickly feel unmanageable and out of control. If you fail to keep up repayments on credit cards and go further into your overdraft every month, as well as not paying regular bills like rent or utilities, then the interest that you owe can quickly mount up, as well as the amount due itself.
Of course, the best policy is to not get into debt in the first place, but this is easier said than done. The important thing to do once you’re in debt is to start paying it off, so that the interest that is due on the amount you owe doesn’t get any bigger.
Debt can be very depressing and if you have a number of creditors chasing you for payment, you can feel like giving up trying to keep up with any repayments, and hiding your head under the sand like the proverbial ostrich rather than facing up to the situation. Clearly, this is not a solution!
Strict budgeting can help you get out of debt. Look honestly at all your outgoings and see where you can cut costs. If you keep your expenses below your income, then your debt isn’t going to get any worse. And if you can use any excess income to pay off debts, you’ll gradually work your way back into the black.
If the size of your debts means that you are being chased by a number of creditors, then you may decide that debt consolidation is the answer. This can work in one of two ways. You can structure a debt management plan, where a debt management company negotiates the repayments with your various creditors and then redistributes one monthly payment from you to those creditors on your behalf. The debt management company charges you a fee that is included in the monthly payment.
The second option is to take out a debt consolidation loan, where you take out a loan to cover the value of all your existing unsecured debts, and then repay that loan with a monthly payment. The debt consolidation loan is usually at a lower interest rate but over a longer period, so you’ll end up owing more in the end, it just makes the situation more manageable.
Using a debt management plan or debt consolidation loan will cost you more than dealing with your existing debts yourself, but it can give you a clearer path to getting debt-free as you can pass over the administrative headache to someone else.