There can be many reasons why you end in more debt than you can cope with. You could have had to take a few weeks of work because of illness, you may have lost your job or you could have just let your spending get out of hand. Whatever the reason, if you now feel that you are drowning in debt, what can you do to try and ease the situation?
Start With A List
The first thing to do is make a list of every bit of money you owe, even if it seems a small insignificant debt. At the side of each one, make a not of the interest rate you are being charged as this will come in useful later.
Most financial advisors will tell you to pay off the smallest debt first. This is because each one you are able to cross off the list will give you momentum to carry on, and whatever your monthly payment was on that one can now be used on the next in line.
Look At Interest Rates
If you look at the interest rates you are paying it should be no surprise to see that credit cards are the most expensive by a long way. Bankruptcy lawyers often have to deal with people that have let credit cards get out of hand, but there are things you can do help prevent this from happening.
Watch for the ones that are advertising 6 or 12 months interest-free if you change over to them. This period can let you reduce the debt by quite a bit, as the full payment is being offset against it with any interest being added on. Some people have cleared themselves totally of credit card debt by doing this every few months. Although it can be an effort to keep making the changes, it can be worth it for the money you will save.
Another thing to consider is if a bank loan would be any cheaper. They often are and have the advantage of being a fixed payment for a fixed term.
Create A Budget
Now you need to make another list, this time of your income and all of your outgoings excluding the debts. Do not forget to include things like food, fuel costs, utility bills, rent or mortgage and allow yourself something to have an evening out or for a holiday.
Then you will be able to see how much you have spare to pay off some of your debts. If it is not enough to pay them all, you need to consider consolidating them into one larger debt that will reduce your monthly outlay. This is a solution for some people, but it only works if you cut up the credit cards, close the accounts and keep that as your only debt until it has been paid off.
There are other ways of course. You could look for extra work or start your own online business for some more money, but whatever you do one thing is certain. Once you have got yourself out of this financial hole you will not want it to happen again.