SimplyFinance - Debt Relief

Finding a Debt Solution

2008-04-18T23:00:00Z

In the March 2008 article, Deeper in Debt, by Ian Paul of Politics Show, we learn that debt in the UK has risen by 170% in ten years. More staggering is the fact that “most of us will have to work for 70 days each year before we have paid off the interest (only interest!) on our personal debt.” And maybe the most frightening is that he references a survey brought up by the MP that shows that “more than half of 14 to 18 year-olds are in some sort of debt by the age of 17, while more than a quarter of them saw credit cards and overdrafts as a way of increasing their spending power.” This mentality, grouped with slowing house sales, tighter credit restrictions and an uncertain financial future are all signs that you should begin working on a debt solution now.

If you are in debt, whether mild or severe, you should begin work on a debt solution of one kind or another. There are very easy steps that you, without any professional help, can take now towards a debt solution and yet other debt solutions that are best guided by a financial advisor of some sort. The simplest start on a debt solution is to fill out an expenditure log. The Debt Counseling Corp.’s website has a simple template for you to use. You fill out the spending log during a week, and then evaluate your expenditures. On its website, DCC suggests that you ask yourself if “there are categories of spending you can reduce or eliminate,” or if “you find yourself spending money more readily if you are in a particular mood.” Once you honestly cut what you can, it is time to write up a budget. Microsoft Office Online offers some free personal budget templates to get you started on your debt solution. Once you have drafted this simple debt solution, stick to it. Some time of careful and cut-back spending is much easier to deal with than the statistics mentioned in the first paragraph.

As mentioned, there are other forms of debt solution that involve a third party: Debt consolidation, debt negotiation, individual voluntary arrangements (IVAs), and bankruptcy are a few of them. A debt solution from this list, however, will cost you money to execute and will most likely negatively affect your credit score, which then affects future borrowing. If you are in over your head though, contacting a reputable financial advisor who can explain and guide you through these more extreme debt solution options is essential.

Finding the Right Debt Counsellor for You

2008-04-03T23:00:00Z

A debt counsellor provides advice on debt management issues, and they often help by reducing your debt significantly and by helping you work towards becoming debt free. Most provide the advice for free, charging you only once you decide on a plan of action that involves further use of their services. For example, if a debt counsellor advises you to consolidate your debts and you follow their advice, they will then charge you for the consolidation products that they sell you. You can choose how much you would like the debt counsellor involved in your financial life, ranging from using a free phone helpline or free on-line survey to hiring their services as a debt negotiator. If you indeed choose to use a debt counsellor, do your homework to make sure that they are licensed and reputable. Often, your creditors can refer you to a qualified debt counsellor.

Debt Management News reports that “one in ten [people is] living beyond their means” and that “in the past six months around five million people have missed monthly payments on credit cards.” Clearly, people are overwhelmed by their financial situations and seem not to be able to free themselves without help. A debt counsellor, as a more or less detached third party, can give you the calm advice that you need, and can follow up with practical products. Generally they will begin with an overall look at your current financial state. They may then suggest that you allow them to work on your behalf, contacting your creditors to negotiate. Most often, if your creditors oblige, you will stop making payments to your creditors, and instead you will make payments to your debt counsellor’s company. They will in turn hand the money over to your creditors. Often, these payments are much more manageable; however, you must remember that you will pay in the end for this relaxed schedule.

If all you need is a someone to take an unbiased look at your finances, then contacting a debt counsellor service may be all you need to get your financial life together. And if you find that you need more in depth help, a debt counsellor can point you in the correct direction.

Debt Elimination: Good for More than Just Your Finances

2008-04-06T23:00:00Z

Kelly McGonigal, psychologist and researcher at Stanford University in the U.S., held an on-line Q&A session on how important it is to eliminate debt because of stress which was then published by the Washington Post. Guided by the public’s questions on why to eliminate debt, she makes her strong point that debt and stress work in a negative cycle. If you are in debt, you are likely stressed. You generally react to stress with some sort of coping mechanism, which for many is to shop, making your debt worse. She points out that stress is a factor in “increased risk for diseases from diabetes to heart disease to infections like the common cold. Stress can also exacerbate any pre-existing conditions (from chronic pain to cancer) by undermining the body’s ability to repair itself or care for itself.”

Obviously, then, working to eliminate debt is of utmost importance. And although there are advertisements galore on-line and on the television about how to eliminate debt, it is best to beware. Much of what needs to be done to eliminate debt is within your power and own abilities. For most, beginning with a spending log is very helpful. Boston.com, in their column “Smart Money Tips for 2008” suggests, “Setting up a spending plan… To start, total your unavoidable expenses, such as rent, food, and bills. Subtract them from your income… From there, decide which expenses you can eliminate, whether it’s the weekly nail appointment or the nightly dinners out.”

After seeing where your money is being spent, set up a budget and stick to it in order to eliminate debt. For those that need to make a visual plan, Microsoft has several budget templates on-line that you can download for free.

If, however, you are in over your head and want outside help to eliminate debt, there are credit counsellors. There are many free hotlines that you can call and free on-line services that will counsel how to eliminate debt; however, again, beware. Do not give your personal information to just anyone. Research the service that you are contacting, and ask them about any fees or suggested donations up front. Once they have heard your financial situation, they may suggest more drastic measures to eliminate debt, such as: debt consolidation, debt negotiation/settlement, an individual voluntary arrangement (IVA), or insolvency.