When you think about debt management you tend to think about professionally organised or legally binding debt solutions. Yet in reality, good debt management skills begin in the home.
As soon as you realise that you have a debt problem, that is to say that you’re unable to balance your repayments with the money that you bring in each month, you should be thinking about taking a close look at your finances. This is where DIY debt management comes in.
The initial step is to sit down and work out exactly what money is coming in and going out. Write up your income and any other money you make either through benefits, a secondary income or other sources. You should then write down separately your expenses – every one of them, no matter how minor they seem. Go through that expenses list and take out anything that is not absolutely essential, that is anything that you could do without.
The next step is to decide whether or not your financial hardship is going to be long or short term. For some people, it may be the case that they’ve just worked less for a couple of months owing to illness, for example. In situations like this, where your finances should level out soon, it’s worth just getting in touch with some of your lower priority creditors and explaining your circumstances. In some cases, your creditors might give you a break in the short term, leaving you able to meet your higher priority debts.
After you have established your high priority debts, you should be looking into how long the difference between your income and outgoings might last. If, for example, you are going through a short term bad difficult spell, such as your hours at work being temporarily cut back, and you know it is going to pass soon, you should contact your lower priority creditors and explain the situation.
If, however, your shortfall between income and outgoings is likely to be a long term thing, you may be well advised at this stage to seek professional advice about your own personal circumstances.
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Tags: Debt, Debt Advice, Debt consolidation, debt help, debt management, debt rescue, individual voluntary arrangement, iva, money solve