January has almost come and gone. The good times over Christmas are but a distant memory as you slump back into work & plough through that pile of paperwork on your desk. Your resolutions, that seemed so realistic 1 month ago, are starting to crumble, and yes, that credit card bill from the holiday season is about to hit the floor.It’s the same every year. We over-spend at Christmas and then for the rest of the year, we try to get out of debt. It never happens though. Each year we just add to last years mounting debt, until one day…BOOM! Our debt explodes into an uncontrollable mess. Creditors here, there & everywhere. Bills & late repayment fees left, right & centre.
So for 2008, let’s do something different. Lets actually get out of debt, and more importantly, stay out of debt. How? Read on…
The options available to individuals wanting to become debt free are many. Whatever your circumstances, there is likely a solution out there to suit.
You could opt for a debt solutions company, who offer solutions such as:
Debt management – An informal agreement where a debt management company will negotiate with your creditors to reduce your monthly payments. They may even be able to get any interest & charges frozen on your accounts.
Debt consolidation – A method of replacing multiple debts with one loan. Your debts are easier to manage and you can often get a better rate.
IVA – An IVA is a legally binding agreement between you and your creditors. If you qualify for an IVA, you can write off all the debt you can’t afford.
These options are all effective. You can avoid the hassle of dealing with debt yourself & if you are willing to search for the right company, you can find ones who offer debt management and IVAs fee-free.
Of course, there are other options. If you feel confident negotiating with creditors yourself, you can achieve much the same as a debt management company.
Depending on your level of debt, you may benefit from simply transferring the balance of your high interest credit cards onto interest free ones. You can often get great deals allowing you to pay no interest, sometimes for over a year, on the balance you transfer. This means all of the money you pay onto the card goes to paying off your debts, instead of just paying the interest.
The solution you choose is completely dependant on your circumstances and what is best for you. The key is recognising the debt problem and addressing it.
Staying out of debt
Ultimately, if you want to get of debt, you need to stop spending more than you are earning. It sounds simple, but it is a fact that people miss. The solutions above will only work if you stop spending more than you earn. If you simply transfer your debts onto interest free credit cards or negotiate reduced payments to your creditors & then continue building up debts with other creditors, you will never get out of debt. You will get caught in the debt spiral that will eventually end in bankruptcy.