Debt Advice (Debt Help in General)

Member Name: jo1l

Product:	Debt Help in General
Date:	22/03/08 (146 review reads)
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Disadvantages: loads

I'm not going to pass comment on how people get into debt, I'm not going to suggest that people who are in debt live in grand houses with 42" LCD TV's in each room as that is simply not the case for everyone. Yes there are people who find themselves sitting on a great pile of debt due to a liking for big TV's, fast cars ,designer clothes and fancy holidays equally there are people sitting on a great big pile of debt due to the need to feed their kids and keep a roof over their heads.


A part from a mortgage I don't have any form of debt, if you'd have asked me 3 years ago the answer would have been some what different. I was lucky my debt was small, it was manageable and it was the desire to go on a "swanky" holiday that made me actually sit down and look at how I could pay off what I owed and still go on holiday without incurring any further debt. Thanks to one web site www.moneysavingexpert.com I manage to clear the debt and actually go on two holidays without resorting to putting it on the credit card and working out how to pay it off later.


The first thing you should do on the road to being debt free is acknowledge you've got a problem be it an overdraft of a few hundred pounds or more serious debts. Then gather all the paper work and work out an action plan. Firstly you need to know how much you have coming in each month and how much is going out. Online banking is a plus if you've got it, as most of the information you will need is at your finger tips. I'm a great fan of online banking - when I first signed up for it I joked and said it was much nicer to view my overdraft with a glass of wine in hand then to see it at the cash point! Look at every thing you have going out each month Mortgage/Rent , Life/Car/Home Insurance , Council Tax, Water rates , Gas/Electric, Landline, Mobile, Gym/DVD memberships etc Add on all minimum amounts you need to pay for your debts Once you've worked out your monthly out goings via standing orders, direct debits and debt repayment then you need to think of all the quarterly/annual bills you have e.g. TV licence, Car tax/Mot etc basically every thing you spend should be broken down into a monthly budget. Look at budgeting for Xmas to avoid the January credit card meltdown. I was one of those people who paid the Car tax when it came normally and ouched as I did it now it's budgeted for each month. As for Xmas lets just say I avoided looking at my credit card statements in January until at least a half bottle of wine had been quaffed! Once you have a list of your entire out goings you need to factor in the expenditure that isn't paid for by direct debit e.g. food/petrol/going out/take aways/clothes/cosmetics etc i.e. everything you spend. With this you might have to do a spending diary for a couple of months to actually work out where you are spending your money - mine was an eye opener to say the least - Lush featured heavily! What's left over -and hopefully you should have a surplus can be used to pay off debts.


Once you've worked out how much you have coming in and how much you have to pay out each month you need to look at how you can find more money to clear your debts or just balance the books look at things like gym membership - do you actually use it? Hands up all of you actually have gym membership and actually go to the gym? I'm yet to find a gym member who can hand on heart say yes I do use it - ok so I hang around with a lot of wanna be fit people who sign up for a gym and never go! If you don't use something and can cancel it then do just that! Once you've cancelled the unused memberships look at other items on your out goings list - do you really need SKY TV? Do you seriously watch all the channels again if it's not used why pay for it? If you can down grade to the smallest package or buy a Freeview box. Once you've rid yourself of life's "luxuries" then look at the other direct debits you pay out each month. Is your landline/broadband /mobile the cheapest? If you are out of the initial 12 month subscription period that most of these suppliers impose then do a bit of homework and find out if you can get them cheaper. Yes it's a hassle but a quick Google of the relevant item can reap dividends. I used to pay Virgin media over £60 a month for a landline/broadband and analogue TV I Googled these items worked out I could get them cheaper and then gave Virgin Media a call I now pay them £30 a month for a landline with 24/7 free calls to UK landlines/Broadband/and the XL digital TV package - all it took was a phone call informing them I was going to take my business else where. Go throw your list of direct debits can you get your home/life/car insurance/mobile/broadband/gas &electric cheaper? Comparison sites can give you the information you need very quickly and I've added a few that I've used in the past at the end. If so switch preferably using a Cashback site to earn a bit extra for switching. Yes it's tedious, yes it's boring and yes it can be obsessive but I now refuse to line the pockets of shareholders by paying over the odds for something that can so easily be switched to and is cheaper. Companies profit on the fact people can't be arsed to switch. To help with budgeting - yes you're going to have to budget now ( a word that used to scare the pants off of me) see if you can pay bills such as your Council Tax over 12 months as apposed to the 10 months that is the norm.


Now that you've cut back the direct debits part of your monthly spend to a hopefully more reasonable level you need to look at what you spend on a week to week basis - can you cut back? Do you really need to spend the amount you do in the Supermarket? I'm not suggesting you starve nor forgo all those nice things you buy but Supermarket shopping was one area I did manage to cut back on and no my cupboards aren't bare - I now shop using a list and only buy from that list before I was one of those people who'd go to Tesco and fill the trolley up and wonder what we'd have for tea! Are you one of those people who buy lunch at work? Taking a pack lunch can save you money - having never been a fan of hospital food I've always taken a pack lunch. Do you really need that bi weekly take away? Can you live without spending £50 in town on a Saturday afternoon? Do you really need 4 glossy magazines a month? Do you smoke? Can you get to work cheaper? As I've said before it's not a question of living like a miser dressed in rags never going out, just looking at what you spend money on and using it to make the most of it! It's your money,you've worked hard for it so why not use it to the best you can?


Having done the financial spring clean it's time to look at paying off the money you owe. Priority debts are keeping a roof over your head, paying the Council tax, Gas and Electric bills. You can not be jailed for missing a credit card payment but should you be unable to pay your Council Tax then yes you could be jailed. Hopefully by doing the financial spring clean you have enough to at least pay your priority debt plus the minimum payments on all your loans/overdraft/credit card Should you find yourself in a situation where you can not meet these then you should contact the Citizens Advice Bureau, Nationaldebtline, Payplan or the CCCS to talk over your various options -all of these organisations will give you free and impartial advice! DO NOT talk to any company that boasts it will reduce your debts by 70% as they will charge you for the privilege and some people who have entered Debt Management Plans with these companies have ended up owing more and paying the company for the privilege of being further debt!


Should you be in a more healthy financial state and have a surplus after your spring clean it's time to get paying the debt. To some people the obvious answer is to get a bank loan and have one debt payment a month - this does work if you actually look at why you go into debt in the first place - it's no good just getting a loan and then wracking up the debt again. And yes I have been guilty of that in the past. The less interest you pay means the quicker you can pay off your debt. If you can then try and get a 0% interest credit card - if you do that cut the card up do not spend on it not only because your trying to avoid further debt but due to the fact, that your spending might well not be at 0% and the way credit card providers apply payments means the part of your balance accruing interest is paid last. If you have managed to transfer one cards balance in full to another card then ring up and cancel that card Should you be unable to gain further credit then look at the interest rates on all your cards, can you transfer some or all of a balance from a higher rate card? If you can then do the credit card shuffle - get as much off a high rate card onto a lower rate card. Do be aware that most credit card providers now charge a balance transfer fee the typical fee being 3% of the amount transferred. A phone call to your credit card provider can lead to them lowering the interest rates and especially if you want to close the account - I was offered a further 0% deal when I rang to close one card. Given the financial squeeze at the moment I can't say this will be the case with you but it doesn't hurt to give them a call and find out.


When it comes to actually paying off what you owe it definitely pays to look at the interest rates. Let's say you have £200 a month to pay off your debts and four credit cards some people might divide it up into 4 equal payments of £50. A much better way would be to make minimum payments on the 3 cards with the lowest rates and hit the card with the highest APR till that is paid off then tackle the next highest APR till all cards are paid off. There is a website that will explain this much better than I can plus it will give you an idea of how long it will before you have paid off the outstanding debt - www.whatsthecost.com/snowball.aspx. They do not ask for any information that would identify who you are or who you owe money to in order to do the calculations you will need to input how much you can afford to pay each month, the outstanding balance plus APR of all your debts and it will come up with results in seconds.


To those of you reading this and wondering if it's time to face up to the pile of bills all I can say is do it and do it soon. Should you need support then go check out the debt free wanna be forum on moneysaving expert.com as the help, support and morale boast you'll get will make sure you're not alone on your journey towards being debt free.


Websites that can help:

www.moneysavingexpert.com
www.whatsthecost.com/snowball.aspx.

Debt Charities

www.payplan.com
www.cccs.co.uk
www.nationaldebtline.co.uk

Comparison sites

www.confused.com
www.moneysupermarket.com
www.energyhelpline.com
www.uswitch.com


Cashback sites

www.quidco.com
www.greasypalm.com

Summary: Hopefully it might help someone!