Many people have credit cards and take out loans and sued correctly, these forms of credit can help you to bridge a gap before payday or to get a good deal with instant finance that you later pay off in full. However, because credit can sometimes be so easy to get hold of, especially by loan sharks and irresponsible lenders who charge high interest fees, many people find it difficult to get a hold of their debt situation and subsequently suffer stress, anxiety and depression as a result.

So, when does a spending habit become too much? According to the online same day loan provider Wonga, personal debt should never exceed 30% of your incomings. When it goes over this point, you may find it difficult to pay off the amount and this could then get on top of you. Interest rates can then pile up and before you know it, you stuck in a spiral of debt that you cannot escape from.

If you are reading this because you think your personal debt situation is becoming a problem, then you are on the first step to improving your situation. By admitting the problem, you can take steps to address it.

Firstly, write down on paper the debt you have and be honest about any lingering debt that you may have forgotten about. Figure out your debt to income ratio using a tool on the web like this one.

After you have calculated this, work out how realistic your repayment schedule is. If you’re sure you can’t meet it, talk to the loan company directly who do very often value honesty and can adapt their repayment schedules to suit your difficult situation.

Make cutbacks. Look at your other outgoings and see what savings you can make to pay off your debt sooner. Think small and the savings could soon add up. For instance, could you shave £5 off a week of your grocery bill? Over the month this could equate to over £20 which is one extra bit of money that could count.

If the debt is really out of hand, talk to a charity like Step Change who may be able to help you with reducing your debt. You may also find it beneficial to talk to friends who in some cases can ‘bail you out’ if you’re really stuck. Of course, this comes with its own implications, (you now owe money to a friend) but in some cases can really save you from a difficult situation.

And remember – you’re not the only one suffering. Many people are in the same boat as you and others have found their way out of it, so don’t give up hope that you can improve your debt situation permanently.

Strategies to Manage Your Debt

It’s no secret that many people across the country carry debt that interferes with daily life and long term plans. One of the most common reasons people put off taking a vacation, getting married, or starting a new business is due to lingering personal debt.

Nationwide, mortgage debt has grown up $10.5 trillion, and approximately 44 million student loan borrowers owe a total of $1.5 trillion. The worst part is that many are unknowingly overpaying on loan interest. For example, about 8 million Americans could qualify for lower student loan interest rates today. Let’s look at some real world ways to get your debt down to a manageable size.

Refinance Your Loans

Refinancing means swapping your current loan for another with more favorable terms. The end result can be a lower monthly loan payment, or you could end up paying off your loan faster. Far too many loans carry high interest rates that can easily be refinanced.

This process is incredibly easy now thanks to the Internet. For instance, a web based, multi-lender marketplace can save borrowers an average of $18,000 on student loan payments over the life of the loan. These online platforms show you prequalified rates with multiple lenders, and the process only takes a few minutes. The same strategy can be applied to mortgages and car loans as well.

Cut Back On Spending

Technically, this doesn’t directly reduce your debt, but it may have a huge impact. For example, if you don’t pay your credit card balance in full each month, any unpaid balance gets added to your overall debt. On the other hand, if you contribute savings towards paying off debt, the benefit is multiplied since you pay less on interest the next month.

Use these items to identify exactly where you spend your money:

  • Credit card statements
  • Bank statements
  • Store receipts
  • Bills

Carefully review your records and find out where you can trim back spending. Then dedicate some, or all, of those savings to paying off your debt. Remember, getting high interest rate (credit card) debt paid off should be a priority.

Set Up A Smart Medical Payment Plan

Large medical expenses are a common cause of bankruptcy since many end up taking out high interest loans to pay the bills. If you owe money to a doctor’s office or hospital, it’s worth asking them for an interest free payment plan. If they say no, then attempt to negotiate a lower interest rate.

You might also look into a flexible spending arrangement or health savings account from your employer. The great thing about these plans is that they allow you to contribute tax free. Even better, some companies will be willing to make matching contributions.


You don’t have to live with crippling debt. If you take the right steps sooner than later, you might be surprised how quickly your debt burden disappears. In summary, try these strategies:

  • Refinance – Exchange high interest rate loans for ones with better rates.
  • Increase savings – Then use what you saved to get your debt down faster.
  • Manage medical debt – Renegotiate current debt and consider employee savings accounts.

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