The recession is the hardest time to be holding debt, and if you are like the thousands of others struggling with the interest that is being taken from them, you are not alone. Not only individuals but also businesses have felt the pressure of the economic crisis. Many businesses have entered company voluntary arrangements just to get through their rough patches. If your goal is to make it easy to manage, get rid of it altogether, or benefit from what good debt can bring then you are already taking the correct steps to educate yourself on managing debt.
Knowing exactly how to manage your debt is a tricky subject as people have different levels of debt, and your history with debt can affect how debt looks on your records. If you are looking at the most effective ways to manage your debt, then you should review the following advice:
How Much Is Owed
If you are mindlessly paying your debts each month without knowing what is owed then you are already doing things wrong. Firstly you should collect all your debts together to get an exact estimate as to how much you owe. This would include the interest that has been added, what due dates are, the number of creditors you owe, and how many monthly payments are being made each month. Create a list of all this information, because this way you will have a better understanding of where your money is going and how manageable everything is going to be in the long and short term. As you get more items on credit, you should update your list to ensure you are always keeping on top of things.
Pay Your Bills On Time
If you have ever missed a payment from your debts, you will have an understanding of how much these missed payments can affect your credit score and make your payments harder to manage. When you do not make payments in time your creditors will add extra interest onto your missed payment, and therefore you are prolonging the time it will take to pay all the debt off. The finance company’s charges will simply increase with missed payments, therefore you should keep on top of things. Creating direct debits might make things easier if you are currently making your payment manually.
Only Pay What You Can Afford
People often make the mistake of paying a large chunk of the debt off in one installment, which as a result leads to more debt in the long run after not having enough money for the rest of the month. Most credit repayments will have a minimum contract amount you need to pay off within the time, therefore if you are struggling you should consider paying the minimum amount requested. It will still show up as you are making your payments on time so you can have peace of mind that you will not be paying extra interest.
Consider Getting Help
If you have lots of debt across various creditors, it might be starting to feel like too much debt to handle. In these situations, others would begin to seek IVA advice. IVAs are valuable resources as they are designed to gather your debts into one manageable regular payment, and they can even reduce the amount of interest that would have been paid if you kept your debts as individual payments.