At times people have the tendency to ignore their debt problem, saying things like “I know, I know…I’ll deal with it next month.” However, the longer you take to face your debt, is the harder it will be to solve and the longer it will take to go away. Ignoring your debt can also place you in a great deal of trouble. For instance, you could damage your credit for life, find yourself in court, develop social problems or even lose your most valuable possessions. Imagine if you lost your house! It is important to note that even if you aren’t presently buried in debt, you should still take heed, you’ll be surprised to see how fast it can build up.

Organize your debt

Take an hour and work out exactly how much you owe; eg. credit card payments, rent, loans etc. Also, know exactly who you owe it to, for instance creditors, parents or even friends. Last but not least, decide on what you can repay at that present point in time. Whatever you cannot pay, explain the problem to your creditors, show them a financial statement of your present position, so they not only know where you stand, but may also allow you to come to some agreement to settle the debt. Let them know how you plan to pay off this debt. Your aim is to prevent the creditor from taking legal action. Therefore, it is crucial that he/she is convinced that you’re being genuine. Remember, creditors want the answer to one main question, won’t the debtor pay, or can’t the debtor pay. Based on what they believe, you may be allowed to pay smaller amounts over a longer period of time.

Do you earn enough?

If the answer to this question is no, look for a better paying job. If possible, get a part-time job; whatever it takes until you’re out of that position. Budget your money, making sure to dedicate a portion of it to debt payments, and do without what you can for a while. For instance, stop yourself from overspending by purchasing unnecessary items. Ensure that you are claiming all the benefits you are entitled to; eg. rent allowance, petrol allowance etc. Do not forget to double check, ensuring that you’re paying the right amount of taxes and not too much. This at times may be an oversight on the part of your employer.

Keep in contact

It’s just proper etiquette to keep in touch with your creditors, if you are missing payments. They will at least be assured that you’ve not forgotten them and the debt you owe, which may also cause them to refrain from hassling you. This will also allow you to think of and adhere to ways to repay them with less stress.

Keep interest costs down

If your creditor grants you an option of repaying a smaller amount over a longer period of time, beware of the interest rates. If you get a bonus on your salary, or find a part time job, use the cash to pay more than you have agreed to pay. This will allow you to finish the payment faster than agreed, and save yourself from wasting a lot of money on interest costs.

When you’ve dug yourself out of debt, aim to remain debt-free. Build your net worth by saving and investing, instead of struggling to keep your head above the water.

For further information call Scotia DBG Investments at 969 6700 or email info@scotiadbg.com