Debt is indeed a big financial burden. Anyone dealing with it just wants quick relief. The faster you can liberate yourself from the grip of it, the more you can focus on other financial priorities.
This is a universal problem and is not 100% preventable. However, you can lighten up its impact with some cautious steps. Although some common scenarios are there, solutions can be different.
You can have multiple debt payments to address. However, your financial condition might not be favourable to support such requirements. Already, previous payouts are due, and poor credit is the outcome of it.
In this situation, defining a perfect escape plan might seem tough. Nevertheless, options like debt consolidation loans for bad credit in the UK from a direct lender are accessible. These loans let you club all the outstanding payments and disburse them with a single payment.
Bid adieu to the exertions of keeping track of them. You can now settle all of them together with the help of these loans. Strategies like borrowing turn out to be useful.
It is not necessary that for everyone, this same strategy would work. Dealing with debts can be of myriad experiences. Be vigilant about some of the common mistakes that can be a culprit in your case.
Keep reading this blog for more insights on this.
Prevent the common pitfalls to start a debt-free journey
The knowledge about the usual mistakes that happen in many cases is critical. Otherwise, you cannot think of taking prevention. Have practical expectations from life as half of the problem begins when you act unrealistic.
You should be the one to curate debt-relief strategies. Maybe, your situation sounds similar to many. However, avoid copying their solutions as your financial circumstances might not match.
Do not believe that escaping debts is possible over the night. Know the mistakes that occur when dealing with debts. This helps in drafting the best plan for debt management.
1. Avoiding the different consolidating avenues
As mentioned earlier, you can easily pay multiple debts together. One arrangement is enough to facilitate this. Therefore, you should not hesitate if you have credit card dues, loan debts, etc., to manage.
You can pick the ideal consolidation option as per convenience. In addition, you can even get a customised offer from a direct lender as a personal loan. Furthermore, you can use it to pay debts individually.
In the latter case, you have to deal with interest rates separately. In contrast, debt consolidation arrangements let you manage the sum of interest rates as a whole. You can search for convenient balance transfer credit cards.
Compare the overall cost you have to cover in all the cases. This makes sure you get the best deal that is bearable for your pocket as well.
2. Not paying attention to interest rates
You know you have the burden of debts over your shoulders. Have you calculated the exact amount? You can be sure about the interest rates you are handling if you know the size of the debt.
When you hold different types of debts, you must have an idea about the interest rates they carry. Some of them might have low rates while some might have high rates. The cheaper debts can be delayed given the amount that ultimately racks up.
On the other hand, managing high APR debts is a necessity. Otherwise, the ultimate amount would be so huge and beyond your capacity. Therefore, it is about setting priorities.
When debts are more than what you can actually manage, you need to be picky. If do not do this, you might not be able to give the required attention to pricey debts. As a result, you have to carry a huge burden of debt for a longer duration.
It is time now when you must take note of the different types of debt you have and their interest. This way, you can focus on paying the high-interest debts first.
3. Continuing with all the expenses
The monthly budget comprises different types of payouts. When you enter a debt trap situation, paying it off should be an urgent task for you. If needed, you must keep other payouts on hold for some time.
It is definitely not the right time to entertain frequent eat-out events. You should be saving money to contribute to debt payments. If you ignore debts and fulfil luxuries, you have to pay more price in the form of interest rates.
4. Not paying attention to having an emergency fund
The current situation is indeed tough. However, you must try to salt away as much money as possible for savings. This can safeguard you in scenarios when an urgent payout might pop up.
Debt should be your priority but it does not mean you should not save money. Maintaining an emergency fund should be one of the basic tasks. If you still do not have one, start with a small contribution now.
This provision helps you to overcome any cash emergency. You do not have to borrow money from outside at heavy rates of interest.
5. Avoid seeking help despite acknowledging the problem
At times, getting external help becomes mandatory. This is because internal funds like savings are not adequate to fill the funding gap. In this circumstance, if you avoid getting help, this will ruin your financial situation more.
It is not necessary for you to get help in the form of a loan. You can even get financial assistance from your friends or family. Sometimes, an advisor is the right person to help you with valuable guidance.
Do not hold yourself back from seeking help. When you discuss your problem with a consultant, they may come up with the best solution.
The bottom line
Losing motivation can trigger a giving-up tendency can be another tricky situation. Any person holding a huge debt pile can feel this pain. However, they should not feel discouraged as it is not a sprint but a prolonged process.
This journey of tackling debts of varying shapes and sizes is not going to be smooth. At any point, you might feel like giving up and escaping. You should be prepared to make adjustments so that you can repay debts at the earliest.
Jessica Rodz is the Senior Content Writer at Cashfacts. She has a long career in the field of content writing and editing. Jessica has the expertise in the UK lending marketplace where she has worked with 7 different lending organisations and acquired many responsibilities from preparing loan deals and writing blogs for their websites.
At Cashfacts, Jessica is managing a team of experienced loan experts and doing a major contribution in guiding the loan seekers via well-researched blogs. She has done graduation in Business (Finance) and now currently doing research papers on the UK financial sector.
