UK Finance News

If you’re struggling with what you believe are unsolvable debt problems then worry no more; we all get ourselves into financial problems at one point or another – sometimes they’re our own fault, sometimes they’re not, but there is always a route out. It might not be quick or easy, but there’s no need to resign yourself to bankruptcy just yet.

The key to beating your debt problem is to tackle it sooner rather than later. If you regularly receive warnings over late payments then start at a very basic level. If you haven’t yet devised a weekly budget then write one out and stick to it. Key to overcoming a debt problem is being aware of it and its severity; burying your head in the sand and ignoring credit card statements won’t make the problem go away.

Once you’ve developed a budget and are confident in its feasibility, it’s time to take a long, hard look at your outgoings. If you’ve been made redundant and are experiencing cash flow problems then a budget may be easier to stick to – it is often more difficult for people used to weekly or monthly treats such as big nights on the town or regular shopping trips. If you’re prepared to show a bit of self determination and cut back on life’s little luxuries, you’ll find your finances get back in shape sooner rather than later.

Credit cards are a fantastic way of borrowing money and, if used correctly, are the cheapest too. There are an incredible number of deals available, and if you can get zero per cent on purchases and balance transfers for a year, you’ll be laughing – providing you remember to pay off your debt as early as possible. There is a flip side however – if you get it wrong, don’t do your research and fall behind on payments your debt problems can intensify and last for a number of years.

It should be remembered that there are two types of debt. Debt by itself is not a bad thing; it’s something that the majority of us will have to utilise at some point or another in order to advance in life. Without debt, very few people would be able to go to university or buy a house, and if used correctly it can be an invaluable tool. The distinction is with bad debt, which really began to emerge during the economic downturn and subsequent recession.

A spiral of bank collapses and redundancies began in September 2008 with the collapse of US financial services company Lehman Brothers. Many people who lost their jobs began to really struggle with their debt after losing their incomes, a situation that can rapidly turn into a living nightmare. But if you’re in a stable job and still experiencing debt problems, what can you do to curb your expenditure?

The danger with credit cards is that people use them to supplement their everyday spending, something that is easily done because of the lack of structure surrounding this particular form of borrowing. While this has obvious advantages in terms of flexibility, those less responsible can soon become reliant on their plastic friends. How many times have you seen the person in the queue in front of you at a clothes outlet, restaurant or music store pay using a credit card rather than a debit card?

If you want to use your credit card correctly, make sure that any expenditure is planned, budgeted for and as inexpensive as possible. A sign of an impending debt problem is reaching for your credit card to ease the outgoings from your bank account. If you find yourself in this situation, stop and think whether you can really afford or need what you want to buy, and whether you may be able to a few weeks or a month further down the line.

Every credit card holder should strive to be a responsible borrower, and this isn’t simply a case of borrowing as little as you can and drawing up a budget. You might be the most prudent spender among your family and friends, but this will mean very little unless you’re able to pay the debt back quickly. It’s also true that the faster you pay it back, the less expensive it will be – and if you’re saving money, you’ll be able to afford more things. Simple.

Arguably the best way to keep track of your credit card expenditure is online. You could wait for your monthly statement to fall through your letterbox, but with lenders stepping up their efforts to be more environmentally-friendly and use less paper, this is becoming a less common way of finding out how much money you’ve borrowed and how much you owe. Instead, register your credit card and bank account to be available online and have access to both via your bank or lender’s website.

While this is great way to keep tabs on how much you’re spending, customers are encouraged to be vigilant against phishing emails. These special types of spam emails are designed to steal your money. How do they work? Well, it’s pretty sneaky – they trick you by being cleverly disguised to appear from your bank or financial services provider before encouraging you to type in and submit your details. Once the phishers obtain these, they have full and unrestricted access to your cash.

The good thing is that there is no need to be caught out. The golden rule is to never, ever click a link and enter your password, even if you believe it to be from your bank. If it appears genuine, it’s always a good idea to give your bank a call to check or visit their website directly.

With these tips, you can look forward to living a life free of debt problems, providing you follow the few simple steps. Once you’re able to track your spending online, you’ll become more confident about sticking to your budget and, in time, begin to reap the financial rewards.