Debt Destroyer

So, when exactly do you know you are in debt trouble? If you use credit cards to make purchases on unnecessary items and are only repaying the minimum amount each month then perhaps you rely too much on credit and could be headed toward serious debt problems if the warning signs go ignored.

First of all, you must know exactly how much you are spending each month and subtract that from what you earn. If you earn less than your outgoings, you could be in trouble, or heading that direction which is something we want to avoid.

For example, if you earn £1,000 take home each month, your rent or mortgage is £500 per month, food, utilities, petrol, and any other necessities come to £300 per month then you effectively have £200 left each month as “disposable cash”. This money can be used on whatever you like. However, if you are using credit to purchase “non-essentials” then you must factor in this amount and deduct it from your disposable fund at the end of each month.

In most cases, people begin to feel the “crunch” when the bills roll in and they are sat there after paying the essentials, and now faced with minimum monthly repayments on credit cards or personal loans, wondering where their wages just went. This is probably the first sign people recognise when faced with the possibility of falling into serious debt.

So, what can you do? First of all, stop spending! Cut up any cards you have that you simply do not need and avoid excuses such as “I’ll save these cards for an emergency”. If you have multiple cards, you really only need one at the most. The others should be introduced to your scissors and waste bin.

If you find you can only repay the minimum monthly bill then you could be headed for serious debt problems. Try to consider the minimum monthly charge as just that, the “minimum” the bank will accept as your next payment. Always send your creditor more than the minimum as this will help repay your debts quicker and save you from paying high interest payments too.

If you are beginning to get calls from creditors and think “why do they keep calling me?” then you probably have had your head buried in the sand for too long. Being immersed in debt is no fun and many people don’t want to think about it because it’s too painful. Some even continue to spend thinking a bit of “retail therapy” is the answer. As we know, it only makes matters worse so once again, get the scissors out now!

If you are forced to find additional work, such as a part time job, then at least you have acknowledged the problem and are making steps to repay what you owe. However, working extra hours does not justify spending more. If you have to work overtime at your primary job or take on a second job then be sure you have a plan on how you’ll use the extra money to repay your debts. If you are going to sacrifice some “me time” by working extra hours, then make your efforts work to your advantage and use the extra cash to pay more than the minimum monthly payments.

In conclusion, if you are just now realising, or admitting you could have a debt problem then it may not be too late to make positive changes now. Cut up existing cards, including store cards, that are only adding to your mounting debts. Write out exactly how much you take home from your wages and deduct what you spend each month to see where you stand. Do you have any disposable income left? Are you in the red?

Worst case scenario is you contact a debt management adviser however, if you can reduce and eliminate your debts on your own then you will teach yourself some valuable life skills. And, once you are debt free, remember the struggle you endured to get there and avoid applying for and using so much credit in the future.