Dealing with debt can be a daunting prospect that leaves you panicking. Where do you start? Whether your debt is large or small, it´s a frightening situation to be in, and dealing with debt can seem impossible. But there are lots of ways to confront the problem, and plenty of help available – providing you take the initiative and take action. Here are some smart ways to deal with debt.
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1. Acknowledge
The first step is to admit that you have a debt problem. If you refuse to acknowledge how bad it is, then you´re deceiving yourself and won´t get anywhere. It may be embarrassing and humiliating to admit to yourself and others that you have got into a financial mess, but it has to be done.
2. Stop Spending
The next step in dealing with debt is to cut back on your spending. You´ll never get a handle on your debt if you keep adding to it – and continuing to spend on non-essentials is effectively doing so. Obviously there are essential outgoings such as rent and bills, but after paying those the priority has to be reducing your debt. This means cutting back on entertainment, clothing, holidays etc. – tough but necessary.
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3. Seek Help
Dealing with debt on your own is certainly not as easy as getting into debt was in the first place! So don´t be afraid to seek help and advice from debt counsellors and agencies. You will not be judged, so there is no need to feel embarrassed or ashamed. Being in debt does not make you a weak person, but a strong person will take charge and deal with the issue.
4. Choose Carefully
When looking for help and advice, avoid using companies who charge a fee to help you sort your debts out. Look for a charity instead. Companies exist to make a profit, and you may find that you pay them a lot of money that could be used to help pay off your debts instead.
5. Budget
Having accepted that you have a debt problem, and sought help in dealing with debt, the next step is to draw up a budget. There are lots of websites which feature forms to help you with budgeting, and debt advisors will also assist you in this. Budgeting shows you where your money is going, where you need to focus your money, and where you can make cutbacks. And then having made your budget, you must stick to it!
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6. Why?
It´s also important to examine the reasons why you got into debt in the first place. Without tackling the root causes, you risk falling back into the debt trap even if you manage to clear them. Is it boredom, loneliness, trying to live a lifestyle you can´t afford, inadequate income, or some other reason? Work out the reasons for your debt problem, and take steps to deal with them, as well as paying off the debts.
7. Assets
Look at your assets – can you sell anything you don´t need? Could you sell clothes on eBay, buy a cheaper car or get rid of it altogether, move to a cheaper apartment or get a roommate in to help reduce your living costs? We generally have a lot of ´stuff´ that we don´t need, and if you´re in debt you can´t afford expensive items. Get rid of them.
8. Don´t Relapse
Finally, when looking for ways to deal with debt, you must maintain good habits once you have taken control of your debts. It´s very easy to sit back once they have been paid off and think that it´s okay to start spending again. It most certainly is not! That´s the quickest route to falling back into your old ways and ending up right where you started.
Don´t panic if you are in debt; there are effective ways to deal with debt and plenty of help and advice available. It need not ruin your life, and however large the debt is, there is always an answer. Pretending that it´s not happening will not solve the problem; you must confront and accept the situation. Have you ever found yourself dealing with debt, whether it´s yours or someone else´s?
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