3 Ways To Effectively Manage and Reduce Your Debt

When you have debt, it can often feel overwhelming and all consuming. No one likes the word “debt”, as it brings with it a whole host of negative connotations, such as being unable to manage money or being unable to budget properly. When, in fact, a lot of debt is amassed in normal ways such as through student loans, mortgages and using credit cards.

However, dealing with debt is a way of life for many, and many people are simply looking for easy ways that they can effectively manage and reduce their debt payments, working towards the goal of paying their debts off completely. With that in mind, let’s take a look at some of the ways in which you can effectively manage and reduce your debt.

Face Your Debts

A lot of people find that the more they ignore their debts or put off facing them, then the worse they get. One of the best things that you can do is to make a list of all your debts and put them in order of the largest or most serious, down to those with the lesser consequence. At the top of the list, you may wish to consider debts which may affect your home or security, such as bills or rent arrears. Further down the list, you might put things such as credit card debts or overdrafts.

The snowball method is a tried and tested method recommended by debt advisors for both paying off and reducing debts. The goal is to clear the debts that have the highest interest rates first, whilst ensuring that you continue paying the minimum amount on the rest, before moving on to the next when it is paid off. By prioritising your debts, you can then better manage them.

Regularly Check Your Credit Report

Your credit report should be updated monthly by one of the three major providers, giving you an insight into your credit score and your financial creditworthiness. Regularly checking your credit report can give you an idea of your financial health, help you to keep track of your debts and help you better manage your finances overall. It’s also a good way to improve your credit score, as it gives you a breakdown of things you can do to strengthen it, such as get a credit card, or register to vote.

Get Help and Advice

One of the worst things you can do when struggling with debt is suffer alone. Being in debt and not knowing what to do about it can be a really stressful and lonely place, but it doesn’t need to be as there are plenty of services available to give you help and support in managing your finances. There are plenty of options available to help you manage your debt, and many of them are ones that people haven’t heard of before. Things such as DRO or breathing space can help give you a bit of a break from having to deal with your debts alone, but these are always best discussed in more detail with a trusted financial advisor.