If you are committed to doing something about your debt, not matter how big or small you need to start by assessing where you are and what you can do.
This two-minute video will help you to nail the key numbers and decide if you are in so deep you need a professional to help you dig yourself out of debt or if you can do-it-yourself.
Watch here or watch on YouTube.
(full transcript)
So, you have run up a bit of debt and you’d really rather not talk about it?
But you are the only one who can fix it. And you should - before it gets out of control.
How do you begin? You work out what you owe.
List all of your debts, the outstanding balances and the monthly repayments.
Once you know what you are paying for debt monthly, see whats left for living. Then work out the numbers .
How much do you need to live on?
You will only know if you draw up a budget.
Remember to focus on your essential expenses or needs only – you may need to cut down on your wants in order to repay your debt.
Use the Budget Planner in the Tools and Calculators section of Smart About Money to work out how much you need to live on.
If you don’t have enough to pay for essential living costs after your debt repayments you are over-indebted. And if you are over-indebted you may need professional help from a debt counsellor.
Getting help from a debt counsellor is a good idea if you are overindebted and have no other options. Debt review has pros and cons
The CONS:
Even if your financial situation improves and debt repayments become more manageable, until you have paid off all your debt, you will not be able to access more credit to, for example, buy a car or new fridge.
You will pay debt counselling fees on top of what you owe.
The PROS: Your debts could be rearranged to make them more affordable.
And the creditors should stop knocking on your door.
How do I know if I need debt counselling?
Go back to your budget. If your income is not enough for you to live on and repay your debts, then cut back on expenses that are not essential until you can.
If you still cannot afford to pay your debts and your essential living expenses without taking on more credit, you may need debt counselling.
See, if you know your numbers, you can sort your debt.
Now watch the next video to see how to use compound interest to save money on your debt repayments.
