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 StepChange 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.