The average total debt per UK household currently stands at £60,935, after the COVID-19 pandemic exacerbated an already soaring debt problem. Although there is light at the end of the COVID tunnel as the economy begins to improve, the problem of debt still lingers for most households in the UK. Fortunately, there are several ways to get out of debt without going through a world of misery. So, do you feel like you’re suffocating under a wave of debt issues? Here are some ways to get your head above these turbulent waters.
- Stop borrowing
First of all, you want to ensure that you’re not piling on more debt while trying to get out of debt. Instead, you would want to avoid borrowing while you consider ways to pay what you already owe. So, if you’re still swiping credit cards, it’s time to stop.
- Renegotiate the terms
You might want to contact your creditors or visit any lending institution you have an outstanding debt with to renegotiate your payment terms. Lenders are always willing to assist ‘clients’ in whatever way they can to help them pay off their debts as quickly as possible. Suppose you’re indebted to more than one bank or institution. In that case, it is advisable to renegotiate with the one you have a better relationship or history with as you’re more likely to get better terms with them.
- Debt settlement
Also known as debt relief, debt settlement is the process of dissolving delinquent debt for significantly less than the amount you originally owe. However, you have to promise your lender a substantial lump-sum payment.
Some experts consider debt settlement to be the cheapest way out of debt. While that position is under contention, debt settlement can allow you to resolve your debt issues for less than the total balance. That means if you cannot afford to pay back the total amount of the debt you owe, you can use debt settlement as a way out.
- Consider debt consolidation
Debt consolidation is a process that allows you to combine multiple debts into one affordable monthly payment. It works perfectly on debts that are not tied to an asset, for example, student loans, credit card loans, and other personal loans.
With a debt consolidation loan, you can effectively pay off your debts immediately and be left with just a single lender to repay. This can make it a lot easier to manage your financial situation. Additionally, with an unsecured debt consolidation loan available, you can get the financial breather you need, even if you have bad or poor credit.
- Track your spending
You also need to figure out where your money goes. Doing this is essential when making budget cuts, as it gives you a clear idea of which areas or expenses take the chunk of your income. Start by tracking all your monthly bills vis-a-vis how much you spend each money. You can also make a list of all the things you spend on, including all your debt payment obligations.