How to get out of debt in five steps as millions rely on credit to fund their festive fun
Many people will be waking up January 1 with a financial hangover - but there are ways to sort our your finances now
MILLIONS rely on credit cards to get them though the festive season but once January springs around they are left looking for a way to shift the debt.
A combined £6.4billion is borrowed over Christmas according to research by Comparethemarket.com.
While a fifth anticipate they will pay for the vast majority of expenses by credit, spending an average of £640 each, the report said.
But, all is not lost. We spoke to five finance experts about how you can straighten out your finances and get out of debt in 2017.
Take your head out of the sand
It can be extremely tempting to ignore those envelopes that land on the doormat – especially in January – but resist the urge to bury your head in the sand.
Ignoring the problem will only make it worse, so take a deep breath, open all of your statements and get a handle on how much you owe.
Write down a list of all of your debts, together with the outstanding balances and repayment dates for each.
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Jane Tully, director of external affairs at National Debtline said: “Setting a household budget might sound like quite a boring New Year’s resolution, but it is absolutely the most important first step you can take towards tackling your debts in 2017.
“It can be tempting to bury your head in the sand – especially after a Christmas than one in three of us put on credit – but opening all of your statements, getting a handle on what you owe and forming a plan to repay is key.”
Identify the debts that need paying off urgently
Take time to sort out how much money you owe and how much you having coming in.
A spokesperson from Citizens Advice said: Identify your priority debts. When you have more than one debt, you need to make sure you’re dealing with the most important ones first, such as your rent or mortgage payments, gas and electricity bills, or council tax. Y
“You can use Citizens Advice’s website to find out which of your debts should be dealt with first.”
Cut your household bills
“For starters, sort out your spending,” Helen Saxon, chief product analyst at MoneySavingExpert.com, said.
“Can you cut anything out, and are your bills as cheap as they can be? If you have debt problems, then doing a budget is central. You have to know exactly what you spend in order to get a handle on your future finances.
Sell, sell, sell...start with the presents you were given that you don’t want
Jasmine Birtles
“Identify any unnecessary expenditures that you could cut down to help reduce spending in the short term, such as your morning cappuccino, or any subscriptions that you’re not using.”
“Also look at your bills – are you paying too much for energy, broadband, your mobile, or even your mortgage?”
Make extra cash by selling unwanted items
Jasmine Birtles, found of MoneyMagpie.com, said: “Sell, sell, sell...start with the presents you were given that you don’t want.
“Either sell them on eBay (go for the ‘Buy it Now’ option as it’s new) or, if it’s big, try your local Facebook group as it’s free and you sell to people nearby who can come and pick the item up.
While you’re at it, look around the house to find things you don’t need that you could sell for a bit of cash: clothes, books, DVDs, even half-used perfume can all be sold and the money put to paying off debts.”
Get help if you need it
Have you assessed your finances, made a budget and made extra cash from selling things? Are things still feeling a little bit too tight? Then don’t bury your head in the sand. Get help.
Edward Ware, from StepChange.org, said: “If you still don’t feel like you can repay your debts, you may want to speak to your creditors – those you owe money to – to explain your situation and see whether they’ll accept reduced payments; or if you don’t feel comfortable then contact one of the free debt advice agencies that can provide independent advice and support on your options.
Whatever you do, don’t ignore it. Half of people say they waited over a year between worrying about their debts and getting any help.
HOW TO GET HELP WITH DEBT PROBLEMS
You don't have to pay if you need help with debt. Get FREE advice from charities, such as StepChange, National Debtline and Citizens Advice
For many people that year is a time when things simply got worse. The earlier you tackle the problem, the chance are, the easier it will be to deal with.
He added: “ Don’t be afraid to ask for advice and support – there are a lot of options out there for dealing with your debts.
“Some informal like a debt management plan (DMP) and some formal like Debt Relief Order (DRO) and Individual Voluntary Arrangements (IVA) and there are other options if you live in Scotland like a Debt Payment Programme (DPP).
“There are different pros and cons for each option, so it’s crucial that you get advice before making any decisions.”
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