Debt management tips

Management tips for consumer debt

Years ago, before the credit crunch came along and before most people in the UK lived on credit cards and finance, managing money used to be fairly simply - if you didn't have it you couldn't spend it! These days however, in the age of plastic and credit scores things aren't quite so straight forward.

Our helpful consumer debt management tips are intended to help you manage your debts better and should give you information on how to get the best work out what you can afford to pay your debts.

How do you manage debts better? - here's our top 10 tips

1. Know how much money you have coming in
   This may seem obvious but for people who get paid varying amounts or have various sources of income this can be just as confusing as anything else.
2. Know how much money you need to live on each month
   Knowing how much we need to live on means breaking down your spending habits in order to see what gets spent where, by money to live on we don't mean things like going to the pub with your mates twice a week, we mean essentials such as mortgage/rent, cloths, food, TV licence etc although it should include something for socialising, we don't want to drive ourselves round the bend just paying debts off!
3. Be sure to set some money aside for emergencies
   Its no good living on a knife edge each month waiting for something to go wrong counting each penny as if it were your last, if you have a little nest egg set aside, however small, it will not only take some of the pressure of but can also act as a financial safety net.
4. Work out how much money you have left after paying your essentials
   The money you have left after paying your essential outgoings is called you disposable income - your disposable income is what you have left after normal and reasonable living expenses have been accounted for.
5. Know how much you owe and who you owe it to
   In order to manage your debts you need to know what you owe, who you owe it to and how much you have to pay the people you owe! This might sound fairly straight forward but you would be surprised how confusing owing money to creditors can be - it gets even more confusing if what you owe to creditors each month is greater than what you have left to pay them!
6. Open a new bank account just for your debt repayments
   If possible, consider opening a new bank account just for paying your debts or for paying all your bills out of - it will make life much easier having the debts separated from your normal finances.
7. If you have enough disposable income
   If you have enough disposable income to pay your creditors at the contractual rate each month then simply set up standing orders or direct debits, ideally in a separate account which you can deposit your 'bill' money in when you get paid.
8. If you do not have enough disposable income
   If you don't have enough money after you have allowed for living expenses etc then you need to work out what you can afford to pay each month out of what you have left and come to an agreement with your creditors - we can help you with this.
9. Stick to the agreed payments
   Stick to your agreed payment plan - once you have come to an agreement with your creditors its important you stick to it - your creditors could think your messing them around if you make arrangements to reduce payments (if you needed to) and then don't stick to them - for this reason its essential you only make arrangements to pay what you can afford.
10. Seek professional help
    If your struggling to reach an amicable arrangement or need help working out your disposable income and creditor payments seek professional help from a company such as Baker Financial as soon as possible.

In many cases the best way to deal with your finances and debts is to emotionally remove yourself from any money problems and deal with them in a 'matter of fact' way - that is, put a business head on and tackle them in a methodical manner, one at a time and in order.

If your are genuinely struggling and want to speak to someone who understands where your coming from simply complete the form above and we will call you back or call 0845 094 2331.