Even the smallest debt requires conscious management because if you stop paying attention, things quickly get out of control. Of course, it’s a less stressful scenario compared to someone dealing with large amounts of debt, in this case, extra effort is required. But debt of any kind needs to be responsibly managed to ensure that it does not get out of hand.
Know exactly how much money you owe
Make a list of people, banks and companies you owe money to, including the total amount of debt, the monthly payments and of course, due dates.
Credit reports or bank statements are good sources to have accurate information first hand. Looking at all your debt, in detail with accurate figures, will give you a new perspective of your obligations and how to handle them.
You should place the list where you can constantly see it so you can responsibly remember your obligations. There’s no point in making the list and then forgetting about it – it needs to always be present so you know there’s a goal to accomplish.
A payment calendar
Handling debt means to be on top of it at all times, so after making the list the next step is to create a calendar for monthly bill payments only. Write on the calendar the amount to pay and due date. Highlight the dates when you usually receive your paycheck.
Pay bills on time
Late payments will only delay your efforts to pay off debt, mainly because it adds to the interest and there’s always a late fee from the bank that increases debt. If the problem is because you constantly forgot to pay in time, then you can use the calendar we suggested previously.
If this happens, pay as soon as you can, don’t wait until the next due date. Just remember that all of these actions have a negative impact on your credit score and this will affect you in the long run.
Smartphones have alerts and reminders, so make an ally out of technology so you can handle your finances responsibly.
Choose a method to pay off debt
Take a look at the debt list you made, and figure out which debt is more easy to pay off. We recommend getting rid of credit card debts first. Identify the credit card with the highest interest rate and deal with that first.
High-interest credit is the most expensive and the one that lasts longer, so deal with those first so you can see results quicker.
You can use this scheme to redo your list and rank debt starting from the ones that can be paid off easily. The method is up to you, you can go with high-interest cards first or you can choose the ones with smaller balances and take care of those first.
Consider building an emergency fund
When people are not capable of saving as much as they would like to, they get discouraged and abandon all saving efforts. If you don’t have strong saving habits, you may get discouraged, so try to avoid this and recognise the importance of saving.
The whole point is to start creating a saving habit, so you can start putting aside a small amount of money. It doesn’t matter if by the end of the month you only come up with £50 or £100 – it’s still a good saving. Don’t be so hard on yourself and recognise the importance of the sacrifices and efforts you’re making.
Make a Budget
A budget is the best tool to have control over finances. More than making a budget you need to stick to it strictly otherwise it’s pointless and you’ll see no results.
When you create a budget you gain control over your spending and make better use of the money that is left after you meet your obligations.
File a PPI claim
It’s not a secret that if you find a way to boost your income you have more means to pay off debt. Did you know that banks have returned over £33 billion to customers after the PPI scandal? Most of them were not aware that there was money for them, it was after the government started to push banks to pay back and after encouraging people to file claims, that everyone saw the results.
We’re talking about tax-free money you can use to bring some relief to your financial situation. If things are not so tight financially, you can use the funds for whatever you want. You’re just a click away, the process is quick and you can find out if you were affected by this or not.
Anyone who wishes to file a claim over a mis-sold PPI policy can do it until August 29th 2019 – after that point, no claim will be permitted and people may have lost the opportunity to claim what is rightfully theirs, so make sure this doesn’t happen to you.
