With reports of recession and credit crunch still making the headlines worldwide, and with the economy under siege, here are some recession-busting tips to keep help you avoid debt:
1. Work out a budget and reduce your spending. Cutting your expenditure should be a priority, so only spend what you need to. If you are already suffering debt problems, the last thing you need to do is overspend at Christmas or book an expensive holiday you can ill-afford. Stick to a strict budget each month and you can make significant savings.
2. Reduce your debts by paying off a lump sum on your credit card or on any loan repayments. Many people suffer debt problems when they can afford to pay off credit card debts. Sticking to the minimum payments when you can afford not to is a mug´s game and you will end up taking years to pay off the debt. Make sure you are paying the minimum amount of interest possible on loans or credit cards, and consider switching to a 0% balance transfer card to clear debt quicker.
3. Reduce your utility bills by checking out prices from different suppliers online. You can probably get cheaper deals for your gas and electricity, especially as a new customer. Also look for cheaper deals from mobile phone and internet providers.
4. Always save where you can as you never know when your circumstances may change. Redundancy and unemployment is a very real possibility during a recession, so always put money away for a rainy day when you can. You can find some particularly good rates around at the moment on ISAs
5. When a recession hits, interest rates are normally cut, so despite the warnings of gloom and doom, this can be good news for home owners as tracker mortgages will fall. A fixed mortgage means you could miss out on a major rate cut, but you will have the peace of mind of knowing how much you are paying each month so think carefully before choosing the best mortgage for you. If your mortgage is in arrears, ask the lender to change your loan to interest only for a set time, or increase your mortgage term to 30 or 40 years. Whichever solution you decide is for you, don´t miss any payments if possible or your house could be repossessed.
6. Don´t change your job during a recession unless you are going to be substantially better off. Companies make cutbacks during recessions so if things take a turn for the worse it is often a case of ´last in first out.´
7. Never borrow more money if you are already in debt, or you will never get through a recession without owing thousands. Tighten your belts and pay off your highest interest credit cards or loans first.
8. Never over-borrow on a mortgage. Only borrow the amount you need and make sure you can pay the monthly repayments comfortably without having to cut back on life´s other essentials.
9. If you are already in debt, don´t ignore letters from lenders as this will only make matters worse. Contact them before they contact you if you think you are going to default on a payment, and ask them to arrange a reduced payment plan for you or get professional advice from a regulated debt management company.
10. Share your debt problems. Too many people hide their debt problems from their partners. One of the biggest steps towards clearing your debt problems is to admit they exist, so that your partner can help you find a solution. Debts.org is creating the UKs first get out of debt community, visit the forum to interact with like mided people, read the blog or comment on our Facebook page, we are here to help and provide as much information as possible completely free of charge, We do not provide any professional services directly, our aim is to provide answers to 99.9% of the questions you will have regarding all aspects of debt management before you make any major decisions and we do this by providing detailed information in our free reports and a free telephone consultation from an approved advisor.
We have looked at the quality of debt advice in the industry and recomend you only consult with Companies that offer a full portfolio of solutions not just one option fits all so you will get the best advice for you and your family.
Ideally suited to debts of less than £5k with some disposable income available. Learn how to consolidate your situation and reduce your monthly payments by learning to negotiate with your creditors directly.
Designed for debts of up to £15k where creditor pressure is becoming too much to handle and you may have failed to agree to an overall acceptable monthly payment with your creditors directly.
Minimum total Debt of £15k to qualify for an IVA. Typically you can write off up to 75% of your debts and repay the balance over 5 years. This is a formal arrangement and failure to maintain it can have serious implications
If you have been refused an IVA or simply do not have any disposable income to come to an arrangement with your creditors Bankruptcy may well be your best option but professional help and advice is strongly recommended before entering into any formal arrangements.