This is a guest post from the writers of PayPlan.com
Anyone facing massive and unmanageable debt needs to get help. A large debt problem is unlikely to be successfully tackled alone and the support and debt advice of a professional advisor is really vital to get back on track.
One of the first things that will probably need to be done after an individual has sought debt advice or asked about consolidating their debts is the setting up of a Debt Management Plan. This is an agreement between an individual and their creditors which allows the repayment of money owed at an affordable rate and timescale. The experienced debt advice staff will remove much of the stress by dealing with the creditors directly. A Debt Management Plan is a very useful way to start tackling debts to different creditors and an important step on the road to becoming debt-free. When setting up a Debt Management Plan look for a reputable company offering a free service.
Once someone has agreed to a Debt Management Plan they will probably need to make some savings in their expenditure to help manage the cost of the repayments. That also means that they will get used to managing their money more effectively and once the debt has been paid off they can start saving.
Anyone looking to cut their expenditure should review all their utilities and insurance products. Using a price comparison site it’s highly likely that most people can shave money of all these essential bills just by shopping around for a better deal. If you have an expensive TV package then consider if you really need to keep the movie and sports channels and remember most bills are cheaper if paid by direct debit so if you’re paying any other way, switch.
Look at your outgoings and work out what can go altogether or be reduced. Gym memberships that rarely if ever get used, a weekly magazine or new addition to the DVD collection, clothes, even a daily take-away coffee on the way to work, can all be cut to save money. Take a packed lunch to work and on family days out to stop spending unnecessary cash in pricey cafes.
Stop buying premium range groceries and switch to supermarket own-brand labels instead. Food waste costs the average family with children £680 every year. To save potentially hundreds of pounds, buy and cook the right amounts of food and get used to being creative with the leftovers in the fridge. Meals out and take-aways need to go as another way to save money and evenings out cut back.
If you smoke or drink alcohol then you could save large amounts of money by giving up or drastically scaling back while at the same time significantly improving your health.
Before buying anything new ask yourself if it’s a need or a want? Of course if you have threadbare clothes and shoes with a hole then they need replacing but if you’re buying something to cheer yourself up or to keep up with the latest fashions then it really has to be put back on the shelf.
If an individual’s debt problems are very large and cannot be managed by a Debt Management Plan then bankruptcy may be an option, but bankruptcy needs to be considered very carefully.
Bankruptcy means a person is financially insolvent and most of their debts can be discharged, or cancelled. While bankruptcy means an individual is no longer liable for the outstanding debts listed in the proceedings, bankruptcy has serious consequences and should not be entered into lightly. If you are thinking about declaring bankruptcy then seek professional debt advice before you proceed.