If you are struggling to come to terms with looking after your own finances and working out a way to get rid of your own personal debt, where should you begin? All of us will face some sort of debt at various points in our lives, whether it is through a short-term and small payday loan to tide us over until next payday and to help cover some unexpected bills, a long-term mortgage on a home or other type of property, or a large bridging loan to help with a business. Learning how to budget and how to deal with finances and work down your personal debt will help you to live a much more balanced life, and help you build a good credit score that will be very helpful in the future.
One of the first things you should do to clear your persona debt is to understand it fully and clearly. Write down all of your outgoings each month, from your rent/mortgage and other bills, and all debt that you pay off on a monthly basis. Include the dates you make payments and the exact amounts that are going out. From this starting point you can begin to work out a plan of action to clear your debt.
Always make a clear plan. For some people it makes sense to tackle the largest debt first, the one that is causing you the most issues in terms of monthly interest. For other people it is important to get into the habit of clearing debt and this can be achieved through targeting the smallest debts first and clearing those to bring about a positive feeling about the entire project. Another option is to consolidate your multiple debts into one large loan that can be paid down in one monthly payment. There are benefits and drawbacks to each approach of course, and it is always down to personal choice which route you choose.
Budget in a strict fashion for the rest of your life, working out exactly how much money you need for bills, groceries etc. as well as any lifestyle and treat money you like to provide yourself with each month. Always be strict during the period where you are attempting to clear your debt, as if you deviate from your budget you are just adding to the length of time to pay down debt. This will only add interest and a much larger total sum of money paid back in the end.
If you have credit cards and store cards you might think that cutting them up and never using them again is a good option. This might be wrong however, as in order to fully cancel a credit card you must phone up the provider and cancel not just stop using it. Multiple cards with small amounts used each month can actually be good for your credit score, as long as you are strict in paying off the balance each month. Maybe use your credit card for your grocery shop and pay it off as soon as you receive the statement.
There are many ways in which you can clear personal debt, but the sooner you begin, the better it will be for you in the long run.
