Short Term Debt Problems - Take Control
Short term debt problems are manageable problems associated with
temporary job loss, sickness, a large one off payment which may
leave you short for a month or two or you just have a lot of
small out of order debts, which you need to take control of.
Below are just a few things to take into consideration when
evaluating your credit situation.
Prioritise your Payments
Prioritizing your payments is a very important step. You must
choose the creditors that are most important to you e.g. your
mortgage payment and your utility companies.
Next are the credit cards and store cards which charge the most
interest, by paying off the cards with the most interest you can
reduce the amount of interest calculated on your next bill.
Try to clear some of the smaller bills first. Although it seems
like there is not a lot of interest amounts being paid on them,
it still adds up. Clearing some of your smaller debts gives you
encouragement to set to work on the others.
Transferring your credit card balance onto another card, with a
0% interest period is also a recommended action. This allows the
full monthly payment to be deducted from your balance, without
incurring any interest.
Always remember to pay off your debt with any available money
you may have at the end of each week/month. Doing so prevents
any arrears and a build-up of interest on credit cards and store
cards.
Can you improve?
Improving your situation is one of the best ways to acquire
extra money. Try to think of ways to maximize your full income
e.g. is it possible for you to work more overtime, can you claim
any benefits, and do you have anything of value to sell? Also
can you afford to cut back more? A drastic measure is to move to
a smaller house and pay less mortgage or less rent, however this
is a worst case scenario.
Contact your creditors
If you are experiencing money problems, do not be afraid to
contact your creditors as they will try to help you. Due to the
process the creditors have to go through to get money from you
if you do fall into serious money problems, it can work out
quite expensive to your creditors. Contacting them could lead to
negotiating a new payment plan.
Before contacting your creditors, make a comprehensive list of
all the outgoings and a realistic amount that you can pay each
month. After you have completed a list of out goings, make a
list of all creditors remembering to prioritize from most
important to least important. Upon completion of this list,
prepare a formal letter explaining your situation and proposing
your payment plan.
When you receive confirmation/acceptance of your proposed plan
(or something close to it) always keep your creditors informed
of your progress. This process is a long drawn out process and
you will have to prove to your creditors that you are struggling
with the upkeep of your payments.
Cut backs
You will be surprised on what you can save on when you cut back.
Make a list of all of your current out goings, this includes all
your shopping, hobbies, magazines, news papers, treats,
everything. When you have produced your list, take a look at it
and remove all essentials
>From this list also look at the brands of shopping you buy, you
can save money buy using a cheaper brand.
The items you have left on your list are obviously non essential
to you, therefore can be excluded from your weekly/monthly
expenditure. You will be surprised to see how much you can save
from this simple money saving technique. However you do have to
be tough on yourself when excluding non essential things, think
to yourself "do I really need it."
Choose the best rates
If you still have a good credit score and still have the ability
to be accepted for a loan, then try switching your outstanding
credit to a new loan or credit card.
Search the internet, local papers and magazines, even keep an
eye on the adverts on your TV, there are hundreds of creditors
offering 0% interest on credit cards. Try doing the same for
loans too. It is very unlikely you will find a 0% interest loan,
however there a lot out there with rates from 5-9%.
Switching credit cards and loans will save you money on
increased interest rates. Look at the big picture over the long
term; you will save