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Your support makes all the difference.While celebrities such as Dionne Warwick, Nicolas Cage and Kerry Katona might be able to end up millions of pounds in debt only to shrug it off and continue in the limelight, we’re not all so lucky.
When you get into a vicious debt cycle, it can seem like there’s no way out. Well, there is, but it often takes years of hard work and dedication to get back onto your financial feet.
If you’re struggling with unmanageable debt and wish you could click your fingers to make it all disappear, you’ll probably be in debt for a long time. However, if you’re willing to do the hard work, there is a light at the end of the tunnel – and the answer doesn’t involve taking part in questionable reality TV shows!
Do the math
It’s easy to see how celebrities end up in debt. Private tropical islands, luxury cars and Faberge eggs are going to drain any wallet, but for you it might not be so obvious.
Before you can take action, you need to know why you’re in debt. Work out your income and expenditure, see where you’re overspending and cut back. Sometimes it’s simple – too many nights out on the town – but if it’s your food bill or mortgage sending you into the red then it may be harder to find ways to cut back.
Organise your bills
The thought of opening up every letter that comes through the door might sound scary but the sooner you get a handle on your bills, the sooner you’ll be debt-free.
Start filing – it doesn’t have to be complicated, something as simple as piles for ‘paid’, ‘unpaid’ and ‘in arrears’ will do.
Make sure you’re paying your bills by direct debit as this will likely save you a few pounds every month – it also means you won’t forget to pay. If you are in arrears, contact the supplier and ask to set up a repayment plan; they’re often very willing to help if you’re in financial difficulty.
Cut the cost of borrowing
One of the biggest outlays for anyone with a significant level of debt is the cost of repayments. Once interest charges have been applied, you could end up paying hundreds of pounds a month just to meet the minimum payment.
If you have high levels of credit and store card debt that are eating up your income, you could consider transferring the balance to a 0% interest credit card. This will require a good credit score, so it’s worth checking out your credit report here before applying.
Stop borrowing
When you have got final demands coming through the door, it’s hard to resist borrowing more money to cover your bills. However, by opening new lines of credit, you could end up making the problem worse.
Instead of borrowing to repay debt, see if you can set up a repayment plan to pay back what you owe. It will harm your credit rating but if you’re in serious debt, the other consequences could be much worse.
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