Debt Help

How to Conquer Debt

As a nation, we've never been in so much debt.  The figure is increasing by £440 million per day, bringing it to a total of around £152 billion.  With interest rates very low and credit companies are being more prudent and people are slipping into more and more personal debt.  The recession, teamed with pay freezes and inflation means that we're not getting as much for our money anymore which is part of the reason why the debt problem is continuing to rise. It is becoming more popular to over hear people talking about struggling with their bills and credit card interest, so we at moneysupermarket have put this guide together on how to save money on your finance so you can tackle your personal debt…

Set a household budget

This may seem like a simple idea but you would be surprised about how few people make a budget and actually stick to it.  Make a list of all your outgoings and subtract that figure away from your income.  Then divide that number by four to let you know how much money you will have left for each week of the month.  Draw out that exact number of money for the week and leave your bank card at home so you don't go over your budget.  This may take a bit of adjusting to but it will make sure that you don't go into the red and you will know exactly how much money you have left for the week.

Keep receipts

Have you ever been shopping and wondered how you've spent so much?  The goods you've come home with can have no correlation to what you've actually spent.  Keep all receipts when you're out and about, including the smaller receipts like when you stop off for coffee, petrol/transport receipts, and the receipt for your lunch.  These sundries really add up so by keeping your receipts you will be able to see where you can cut back in the future. 

Switch your credit card balances to 0% credit cards

If you have a credit card and you're paying a high interest rate, think about switching credit card companies which will offer you 0% balance transfers.  This will only be for a set amount of time, say 3 months, but it will mean that you can pay some money off the actual balance instead of having to pay the interest as well.

Spend a little save a little

Even if you're on a relatively low income it is important that you save a little each month.  Many people spend all of their income and then are left dry at the end of the month and have nothing to fall back on.  When there is an unexpected bill, such as a high energy bill or your washing machine breaks you will have no money to fix the problem, possibly meaning hardship over the coming months to try and balance out your balances.

Avoid buying things on credit

It's tempting to buy things on credit which you don't have the money for now- especially big purchases like TV's, sofas or white goods.  Because you're not actually handing any money over any cash it can feel like you're getting the goods for free, but it's a different matter when the repayments start with interest.  Even if you know you can afford the monthly payments, it can work out much more expensive overall because of the interest you will pay.  When you can, choose your purchase carefully and aim to pay for big buys up front- then you can forget about payments and won't have to worry about variable APR's.

Compare energy providers

Many people receive their gas and electricity bills and pay them without giving them a second thought. Over the past few years energy companies have become increasingly competitive and some are cheaper than others.  By switching to a cheaper energy provider you could potentially save around £228 per year, which you could spend on consolidating other debts or saving for the future.  The same goes for other home services you use, such as broadband providers and any insurance policies you have.  Always compare services and policies online to see if you can make a saving.

A debt article, by Rachael Miller from moneysupermarket.com