New Year – New Solution
words | Adam Dawson,
Managing Director of Close Finance

    
Christmas may have left you with a financial hangover that could last long after the headache has gone, but it can be fixed. This is a step-by-step guide to debt, and how to manage it.

1. The first step is to accept that you have debt and to look at it honestly. You’re not going to manage it if you don’t.

2. Put your debts to one side for a minute and focus on your monthly budget. Work out how much you REALLY need to cover your rent/mortgage, heating bills, taxes, food, clothing, entertaining, travel and every other outgoing that you have.

3. Subtract your monthly budget from your monthly income. That will show you how much you have left over each month to pay back the money that you owe.

4. Now look at your debts. What is the total minimum monthly repayment on all your cards, loans and other debts? If it is more than the money that is left over, you need to consider a consolidation loan, which will reduce the amount that you pay out each month.

5. Basically, a debt consolidation loan involves using one new loan to pay off all your outstanding loans, credit cards and store cards. It means that you are left with one creditor instead of lots of them. That can reduce the debt worry, make repayments more manageable and make it easier to handle your monthly budget.

6. If you are already able to make all your monthly minimum repayments from the money that you have, it may still be worth taking out a debt consolidation loan because you could pay a lower rate of interest.

7. A debt consolidation loan only works if you manage to control your spending and don’t add any more debt. That means setting a realistic monthly budget at the start and then sticking to it. If you do, you’ll soon be free of your financial headache.

Come and see us at Close Finance. We believe in responsible lending, which means that we help you to sort out your finances. We’ll be up-front about how much the consolidation loan will cost, and we’ll give advice on how to manage your money. We want to help.