Practical Debt Advice for 2024

Practical Debt Advice for 2024

When dealing with your debts, it can be difficult to know where to start or how to begin moving towards getting debt free. We hope this article gives you all the information that you need and offers ways of seeking help to get in control of your debts in 2024.

In 2022, new customers coming to MoneyPlus for cost-of-living related debts rose by a staggering 353%. A startling indication of the new wave of people falling into debt for the first time due to the current cost of living.

In this guide, we will be sharing some helpful strategies that you can implement on your own to manage your finances and alleviate debt stress, whatever your debt level.

Assess your financial situation:

Begin by thoroughly examining your income, expenses, debts, and assets. Create a budget to track your monthly spending and identify areas where you can cut back.

Chances are there are a number of places you’re spending far more money on than you think or are paying for subscriptions and services that you either don’t use or could live without.

Once you have a more clearly defined picture of your finances and outgoings, it’ll be easier to plan your financial future more realistically.

This will also help you gain a clearer understanding of your financial health and determine what you can afford to repay.

Prioritise your debts:

There are a couple of methods that work for helping you more effectively pay off your debts.
These methods are:

Debt Snowball – The debt snowball method is the process of paying off your debts incrementally, starting with your smallest debts first and working your way up towards your bigger debts, paying the minimum amount on your other debts and working through them one at a time building up a snowballing effect.

Debt Avalanche – The debt avalanche method works by focusing on paying off the debts with the highest interest rates while making the minimum payments on the rest of your outstanding debts. This method is the best for saving the most on interest payments, though it may take longer to see the results of your efforts.

Reach out for professional help:

If you’re feeling overwhelmed by your debts or would like someone else to manage the repayments for you, seek advice from a regulated debt advice organisation. A debt advice company can provide personalised guidance, help you create a manageable repayment plan. Some, like MoneyPlus Advice are regulated to manage debt solution options, such as a Debt Management Plan (DMP), Individual Voluntary Arrangement (IVA), or Debt Relief Order (DRO).

Consider debt consolidation:

Debt consolidation involves combining multiple high-interest debts into a single, lower-interest loan. This can make your debt payments more manageable, reduce your interest and charges, and simplify your monthly budgeting. In the UK, debt consolidation loans or balance transfer credit cards are popular options for achieving this.

Create an emergency fund:

Having an emergency fund can help you avoid relying on high-interest credit in times of financial stress. Even putting aside the smallest amount each month will make a difference over time. According to a recent study, 46% of UK adults have less than £100 in savings, highlighting the importance of building an emergency fund.

Communicate with your creditors:

They may be willing to negotiate more manageable payment plans, temporarily freeze interest, or offer other forms of assistance. Early communication can prevent the situation from escalating and make it easier to find a solution. We know it can be really hard to start conversations with creditors, that’s why customers on a managed plan with MoneyPlus Advice have access to expert teams to take care of creditor contact for you.

Take steps to improve your credit score:

A better credit score can help you access more favourable borrowing options in the future. Make sure to pay your bills on time, reduce your overall debt, and avoid applying for new credit too frequently. Regularly check your credit report for errors and monitor your progress.

By following these practical tips and seeking professional advice when needed, you can navigate your way through these challenging times and work towards reducing your debt burden and achieving financial stability. Remember, you’re not alone in this journey, and there are numerous resources and support networks available to help you take control of your finances.