Debts can feel overwhelming, and it can be hard to know where to turn.
Even before the coronavirus pandemic and the living costs surge we’re currently seeing, more than a third (35%) of households in Britain were spending more than their disposable income, according to Office for National Statistics (ONS) figures.
With the cost of living rising and the Glasgow Times raising awareness of this issue through our Beat the Squeeze campaign, it’s important to know help is available and you don’t have to deal with money struggles alone.
READ MORE: Five ways to have a financial spring clean ahead of the new tax year
Here are some tips for managing debt, from managing director at Shawbrook Bank (shawbrook.co.uk) Paul Went…
1. Check your spending
Went recommends looking at your incomings and outgoings. If you’re spending more than you earn, see if there’s anything you could cut back on – even if it’s just for a few months.
“Cutting back on even small purchases is a step in the right direction to paying back any loans or debts you owe,” he says.
2. Get support
Speaking to family members or trusted friends may help. There are also organisations such as Citizens Advice (citizensadvice.org.uk), StepChange Debt Charity (stepchange.org) and the National Debtline (nationaldebtline.org) – a debt advice charity run by the Money Advice Trust. Some people may be able to access “breathing space” schemes, to get temporary respite from debts.
Went adds: “If you find yourself in a place where your debt has become unmanageable, talk to your lender about your situation, rather than missing a payment.”
READ MORE: Eight ways families can save money during cost of living crisis
3. Create a plan
This involves working with a debt advice organisation to work out priority and non-priority debts.
Some bills are classed as priorities – for example, your rent or mortgage – because the consequences of not paying them can be more severe.
4. Ask your lender about payment holidays
In general, Went says: “Payment holidays can offer a short-term break from monthly repayments, but it’s important to remember interest is still charged during this period. This means the total amount of debt which you need to repay will increase, and is usually added on to the total amount payable.”
5. Would moving your debts help?
A debt consolidation loan could “enable you to combine all or some of your existing debts into one manageable monthly repayment”, Went adds.
If you’re currently paying high interest rates on debts, it might be a good idea to see how you could reduce these charges.
Another option could be moving debts onto a zero interest balance transfer card, but be sure to take any fees into account before transferring the balance.
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