It can be hard to get out of debt once you have found yourself buried deep in a financial crisis. You need to prioritise what you can do to help yourself before the situation gets any worse.The first thing to do is assess your situation. Work out who’s charging what, how much interest you are being charged, and who should be getting how much. Sit down with all of your bills and calculate what you owe and what your ongoing expenses are likely to be. Get a copy of your credit report and analyse it carefully to make sure its correct.

Next look at why you are spending. Have you been unhappy and felt like buying a new outfit? If so, this is due to emotional spending. But, if you’re short because you had to buy your weekly groceries, then that is practical spending. Knowing the difference between the two could help you manage your debt quicker.You will be able to create a budget once you know your situation and why you are in that situation. Work out how much you spend on a monthly basis, and an amount of money that you will need for everyday life. 

Cutting out your expenses is a simple concept but so hard to follow. 

If you really can’t seem to get out of debt following the above steps, speak to a debt advisor who can help you. 

The Pros & Cons

Consolidating all your debts can reduce both the interest and the amount you are paying each month It can also make your debt much easier to manage. This may also mean it will take longer for your debt to be repayed, which could cost you more in the long term.

Present Market Situation

We can never be sure what the economy status will be like for the future, or even what your own financial situation will be for that matter. You may be able to afford your repayments today, but maybe not tomorrow if your salary decreases. Who knows you may change job roles and end up with a larger salary which means you can pay all your debts off even quicker. In the long run, consolidating your debts could free up the cash you need to bring your expenditure back in line with your income.

In a Credit Crunch

Today’s credit markets might make debt consolidation loans a bit less attractive than they were before. Lenders are having to pay more for the money they borrow, which means they have to charge more in return.

The Alternatives

You can consider other options for solving your debt. For example, a a debt management plan or an IVA. It’s important to speak to a debt adviser who can help you understand what’s right for your situation.