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How to Reduce Your Debt

Debt need not be a life-defining issue, because no money problems are unsolvable. The road that needs to be taken to fix such a financial problem might not be an easy or quick one to take, but there is always a route, and there is always a light at the end of it.

If you are in dire need of reducing some of your debt, as it’s gone way past only being a financial issue and is now starting to impact other areas of your life, then start doing so today. To see what you need to do to do so, ensure to read on.

Sort out your spending

The first thing that you need to do in your quest to reduce your debt is to sort out your spending. More to the point, you need to begin budgeting and reducing your outgoings whenever and wherever you can.

When it comes to budgeting, first, you should question whether you spend more than you earn, and you should be truthful with the answer that you give yourself because when you overspend on each annual sum, you make your debt far harder to deal with and far likelier to spiral out of control.

As Dickens pointed out even as far back at the 19th century:

Annual income twenty pounds, annual expenditure nineteen six, result - happiness.

Annual income twenty pounds, annual expenditure twenty pounds six, result - misery.”

You need to fight your urge to overspend each time that you have a bit of money in your pocket because, when you do fight it, your debt will be much easier to control.

How do you do stop spending, especially when you are so accustomed to doing so? To start with, you should ask yourself that all-important question: ‘Do I need it?’ — if the answer is a definitive ‘NO!’ then simply don’t buy it. What you should also seek to do is ensure that you check out all of your options and alternatives before you commit to spending on a certain product or service, as you could find the same thing for half the price somewhere else.

Use what you are entitled to

Be it in the form of benefits, mortgage assistance, grants and support offered by utility companies or the chance to reclaim on something, everybody is entitled to something, and you must ensure that you are tapping into whatever it is you are entitled to.

When it comes to the specific case of reclaiming something that is rightfully yours, you have to be working alongside a finance professional, i.e., your own personal financial advisor. They will have a far greater understanding about what it is you are fully within reason to claim for, be it mis-sold payment protection insurance or bank or credit card charges that you have incurred wrongfully over the years, and they will de-jargon everything in regards to them to ensure you miss nothing. The money that they then help you to reclaim can be put towards the process of your clearing yourself of your debt.

Cut the costs of your debt

As if debt wasn’t bad enough, on top of all the problems it already brings, it costs. It’s true, it costs to be in debt, and, with every missed payment, it becomes even pricier. For this reason, you need to be cutting the costs of your debt because doing so will help you to alleviate the money struggles you are dealing with which, then, in turn, makes your overall debt easier to clear.

The first thing that you should do is shift your debts to cheaper credit cards. When done so with supreme care and absolute discipline, you can use low-interest credit cards to borrow the money you need to pay off your debt, allowing you to then pay the money you borrowed back at a later date with far less of a financial burden attached to it. When shifting your credit in this manner, only ever do so to providers that provide ‘balance transfer’ offers.

Use your assets wisely

You may be riddled with debt, and you may not have the money to pay it all off, but you do, more than likely, have a number of assets to your name that can be used as collateral in your debt-clearing process.

Your most important one is your home, and you can use it to help alleviate your debt problems. Because your home is a secured loan that you have already taken out, by shifting all of your debts onto your mortgage, even those brought about by other loans that you have taken out, you can bring your debt right down. Make sure you can repay the debt you put on your mortgage, however, because not doing so will see you lose your home later on down the line. If you don’t want to touch your mortgage, and if your debts are big enough to warrant you doing so, simply sell up, take the money, pay off your money troubles, and rent back.

Another asset that you can use to free up some finances is your car. To do so, you could either bite the bullet and sell it, or, if you'd rather keep your motor, you can take out a logbook loan on it. This is a type of secured loan that would see you sell off the ownership of your vehicle to a lender, which they would then use as security for the money you borrow from them. You then pay the lender back the money you borrowed from them over time, all while still being able to use your car. There are also many benefits to switching loans between companies — you can switch logbook loans to Car Cash Point and save money. So, if you have a car that you are willing to use as collateral in your quest to clear yourself of your debts, a logbook loan is a no-brainer.

Debt may be difficult to deal with, but you need not have to deal with it forever. By taking any of the advice above, you’ll find yourself well on your way to living a debt-free life.

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