It is shocking to know that more than 8 million people living in the UK have debt problems.
However, it is important to note that anyone can engage in a financial issue owing to the problems we have to deal with every day.
Although it seems easy to borrow a few hundred pounds, it can take years to pay off this amount back. When it comes to paying off debt, everyone has a different way. Thanks to experts, here, we will guide you through a few strategies that can help in getting out of debt:
Stop Borrowing More Money
The easiest way to get out of debt is to stop borrowing more money. One of the biggest mistakes that a lot of people make is, they start borrowing money to pay off existing debts. This way, you only add more to the total amount of money you have to pay off. Despise using credit cards and be happy with whatever you have to spend. Restrain your expenses and try to create a demarcation between necessities and luxuries.
Build an Emergency Fund
If you have a large amount of debt accumulated on your head, it is imperative to get rid of it as soon as possible. Building an emergency fund sounds tough, but it is not impossible. For example, if you have to pay off $1000 in the next ten months, start saving from now. Pack home-cooked meals for lunch and avoid eating from outside. Most experts claim, an ideal emergency fund ranges between $1000 to $1500 and can be accumulated in 6 to 8 months.
Engage in an Individual Voluntary Agreement
If you have a large amount of debt on your head that is impossible to be paid in a few months, it is better to talk to the creditor and engage in a legally binding contract. In many cases, the relationship between a creditor and debtor gets deteriorated when payments are not made due on time. However, by engaging in a written contract, two parties have a perspective on what exactly needs to be done. Visit this website to know more about IVA and how it can assist you.
Settle For a Lower Interest Rate
Higher interest is always a burden when you borrow money. Sometimes, the interest amount is more than the actual amount, a person has to pay. Furthermore, higher interest charges also delay the time it takes to make the final payment. If you have a good credit history, the creditor will give you a discount on the interest rate. Contrary to this, people with a poor credit history are unable to win the creditor’s confidence and often end up settling for a higher interest amount.
Consider Professional Help
If you are a financial novice and don’t have hands-on experience of managing your finances in the best possible way, there is no harm in considering professional help. You can easily get a debt management plan from a financial expert. Let the credit counselor know about your current financial situation and monthly expenses. He/she will work out a smart plan for you that will last for a few months. Once you start following it, things will become easy, and your debt amount will eventually come down.