Having multiple owed debts looming over you can be overwhelming and difficult to manage. However, there are steps you can put into place and ways to best manage your debts to get them cleared as soon as possible, allowing you to be financially free again.

BUDGETING

Assess your cash flow; how much money have you got coming in and how much are you spending per month? By analysing your finances in this way, you will be able to see the money you have available at the end of the month that can be allocated towards paying debts. Analysing your finances will allow you to identify key areas where you can cut back spending and save money, whether this is subscriptions that are no longer needed, or shopping bills at more expensive supermarkets.

PAYING CREDIT CARD DEBT

Credit card debt is one of the most common types of debt that people find themselves in. It is easy to overspend on a card at the time and owe the difference at a later date. For some, paying this back becomes a near impossible task, due to the costs of everyday life being greater than their current cash inflow. However, by using a personal loan you can pay back credit card debt in full. Personal loans often have lower interest rates than credit cards, so taking out a lower interest loan to pay back the credit card can be an easier task than paying back a high interest credit card.

DEBT MANAGEMENT

If you have multiple debts, it is important to manage these debts and pay them back in priority order. The first debts you should focus all attention on paying back are problem debts. Problem debts are those with the highest interest rates, accumulating the most interest if they are not paid off. By paying off high-interest problem debts first, you can save money in the long run, as the remaining debts you have will have lower accumulated interest than if you had left the high interest debt unpaid.

On the other hand, if you not worried about the high interest debts accumulating more interest, then you could choose to start with the smaller and lowest interest debts, helping you to see progress and achievement little-by-little.

CONSOLIDATING DEBTS

Having multiple on-going loans at one time can seem difficult to manage, and even harder to pay back. Consolidating allows you to combine multiple higher interest loans into one loan, often with a lower interest rate, helping to reduce the high interest that was spread across multiple loans. This also helps you to manage paying back the debt, as the loan will all be in one place which appears as a more manageable task to pay back.

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