2. Make A Debt Plan – The 12 Tips Of Christmas

The 12 Tips Of Christmas – All 12 Tips Of Christmas Posts

Save Some Money – Referral links to receive money off

Merry Christmas and welcome to the second post of my 12 Tips Of Christmas series. 

These are a series of posts that will be going out on the lead up to Christmas and the New Year to help guide you towards a better money mindset with an aim to give you a base knowledge of personal finance.

Debt can be scary. It can feel like a weight around your ankle in everything you’re trying to do and achieve.

But despite the hold it has over some people, no matter how sizeable the debt it’s important to remember there is always a way out.

In the last post I discussed budgeting and segmenting your budget in order to make it more palatable and manageable. Tackling the budget bit by bit makes it seem less of a mountain and more of a scaleable hillside.

This is the approach we want to follow again when structuring a plan to tackle debt and proceeding to pay it off.

First you need to check your credit file/ report to determine everyone you owe money to and how much you owe to each and how much you owe overall. You can do this by obtaining a free credit report from one of the three credit reference agencies in the U.K:

Your credit report doesn’t just detail debt either. It’ll help you see any open bank accounts, credit cards, loans or any other lines of credit you have open and any that are now closed. This will give you an overall credit score which helps loan companies and credit lenders determine whether or not to lend you money, either through a loan, mortgage or any other type of credit lending method.

This also helps prevent fraud, allowing you to see any lines of credit or accounts you may not recognise and that could potentially be being used by fraudsters in your name.

Once you understand who you owe money to, start by putting every one in a list along with the interest being charged on each.

In a previous post I mentioned a few ways of tackling debt including the snowball and avalanche method.

By finding the most expensive and putting all or the majority of your spare money towards this one first until it’s cleared, you’re undertaking the Avalanche method. This will serve as possibly the cheapest method in the long run, but may seem the most daunting initially as it could be the highest value debt.

By tackling the smallest debts first, despite the interest being charged, you can tick off the different creditors you owe money to quicker if you have multiple. This is called the snowball method. But this may be more expensive in the long run if you’re not tackling the higher interest debt first.

But you don’t have to do all this alone. Once you’ve determined all your debts and lines of credit from your recently obtained credit report, get in touch with an institution like StepChange. They can help you organise a plan of action to tackle the debt with your current income, no matter how large or small, and no matter how long it may take.

There are other bodies available like StepChange too. With their name behind you, you stand yourself in good stead when it comes to talking to creditors. They’ll prepare you and help you with every conversation you have as well as alternative avenues to explore that you may not have been aware of otherwise.

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