After the madness of the Christmas period, unfortunately we are now back to reality, with credit card bills and bank statements hitting our door mats. Reminding us all that we have spent too much money over the last month or so. In most cases I would imagine money that we could ill afford to spend.
So what can we do to reduce our commitments each month, without having an adverse affect on our credit rating? There are a number of things that can be done but the first should always be to make a list of everything you have to pay on a monthly basis, write down what it is and what it costs you (it would probably be easier to do if you have your last bank statement handy so you do not miss anything off). Once you have the list you should go through it very carefully to see if there is anything that can be stopped even if only temporarily such as a magazine subscription or a reduction in your sky TV package etc. Cutting back on any non-essential items will free up more money to go towards reducing your credit card or catalogue debt.
If you cannot make enough cut backs to make a big enough difference, because you have too many smaller debts, you should then consider a debt consolidation loan.
A debt consolidation loan is a loan that is taken out to repay any existing expensive debt that you may have on credit cards, store cards, catalogues, overdrafts, etc. Then instead of having to make many repayments each month you only have to make one. Consolidating all your debts into a secured loan will not only save you money each month, it will also give you a fixed date when you will become debt free.
Before you apply for your loan you should work out a comfortable budget each month, making sure you make an allowance for some savings (if you get into the habit of saving even only a small amount, it won't be long before you have enough money put aside to deal with any emergencies rather than using your credit card again). In doing so you should work out the maximum amount you could comfortably afford to pay each month towards your loan. Once you know what you can afford you can adjust the loan term to the shortest period where you can afford the repayments, it will cost you less in interest that way.
All you need to do then is apply for the loan; the lender will probably pay all your credit cards for you, then you must destroy your credit cards. This is of the utmost importance because it is all too easy to fall back onto the credit cards and put yourself in the mire again.
So what can we do to reduce our commitments each month, without having an adverse affect on our credit rating? There are a number of things that can be done but the first should always be to make a list of everything you have to pay on a monthly basis, write down what it is and what it costs you (it would probably be easier to do if you have your last bank statement handy so you do not miss anything off). Once you have the list you should go through it very carefully to see if there is anything that can be stopped even if only temporarily such as a magazine subscription or a reduction in your sky TV package etc. Cutting back on any non-essential items will free up more money to go towards reducing your credit card or catalogue debt.
If you cannot make enough cut backs to make a big enough difference, because you have too many smaller debts, you should then consider a debt consolidation loan.
A debt consolidation loan is a loan that is taken out to repay any existing expensive debt that you may have on credit cards, store cards, catalogues, overdrafts, etc. Then instead of having to make many repayments each month you only have to make one. Consolidating all your debts into a secured loan will not only save you money each month, it will also give you a fixed date when you will become debt free.
Before you apply for your loan you should work out a comfortable budget each month, making sure you make an allowance for some savings (if you get into the habit of saving even only a small amount, it won't be long before you have enough money put aside to deal with any emergencies rather than using your credit card again). In doing so you should work out the maximum amount you could comfortably afford to pay each month towards your loan. Once you know what you can afford you can adjust the loan term to the shortest period where you can afford the repayments, it will cost you less in interest that way.
All you need to do then is apply for the loan; the lender will probably pay all your credit cards for you, then you must destroy your credit cards. This is of the utmost importance because it is all too easy to fall back onto the credit cards and put yourself in the mire again.
