There are few things more stressful than being weighed down by debt. But even with large loans and credit arrangements, it doesn't have to be that way. In fact, there are four simple ways to stay on top of your debt.
1. Start budgeting
It's tempting to shy away from the scale of your debts, but it's essential to have a clear view of all of your income and outgoings. That means collating everything into an easily searchable collection of data, which can easily be displayed in graphs and projections. Our free money management software makes this simple, presenting all of your data in one place.
By collecting your account logins in one secure, read-only space, your Money Dashboard will build a database that clearly shows all of your monthly expenses. All transactions can be tagged and broken down according to debt repayments, bill payments and food budgets, as well as dozens of other categories. Using our software will give you a better understanding of exactly how much you can afford to pay back each month, helping you to easily schedule repayments and work towards a debt-free future.
2. Prioritise payments
Prioritising is difficult when everything seems urgent, but there are a number of debts that clearly fall into the "priority" category.
Priority debts are not always the biggest or most expensive. In a nutshell, they are those that can result in you losing your home, property or amenities; or cause you to be declared bankrupt or taken to court. Priority debts include:
- Loans secured against your home
- Utility bills
- Council tax
- Court fines
Once severe consequence are averted, pay as much as you can on remaining, non-priority debts. Start with the most expensive (highest interest rates), or those likely to adversely affect your credit score due to late payment or default, and aim to meet as many minimum payments as possible each month to avoid extra interest. 'Non-priority debts' include:
- Credit cards
- Personal or payday loans
You can use Money Dashboard's tagging feature to see exactly how much you're paying back to each lender, and how that affects your monthly budget.
3. Maximise your money
If you're not worried about missing deadlines yet, or you've wrestled control of your finances back, it's time to look at how to save money.
Start by using your budgeting tools to compare your savings rates against the cost of your debt. If you have money languishing in a low-interest account, it would be sensible to use it to pay off a lump sum of a debt to avoid later or greater interest charges.
4. Compare deals
Keep a close eye on the options available to you. If you're comfortably making your monthly payments, you may be able to switch to a better priced loan or utility package. You can use our price comparison tool to see what's out there: you might be able to save money on your monthly bills, or reduce monthly payments on troublesome loans
Be wary of firms offering debt consolidations or easy routes to financial security, though. A worrying number are simply offering high-interest consolidation loans in order to make more money from your debt. If you are genuinely struggling, and your budgeting has shown reason for concern, seek advice from charitable organisations like the Citizens Advice Bureau, National Debtline or Step Change, who will offer free, impartial advice.
Posted by Marc Murphy, Marketing Manager at Money Dashboard.