The standard advice for repaying debt is to service the most expensive debt first, so reducing your interest charges. However, sometimes it’s a bit more complicated than that. What if you owe money to friends or family? Should they come before debts to a financial institution? Millionaire Artist ponders on this when deciding how best to use a ’spare’ thousand dollars.
TV, magazines and the web are flooded with adverts from companies touting debt consolidation loans as the solution to all your financial worries. Is consolidation a worthwhile strategy, or just a way deeper into the mire?
For smaller debts of a few thousand pounds or less, you can save a fair amount in interest payments by shifting the debt to a credit card which offers a balance transfer offer.
First introduced to the UK by Egg back in 2000, an introductory 0% deal lets you load up your credit card with debts from other places (overdrafts, other cards etc) and avoid paying any interest on the balance while the offer lasts.
Debt Management is a method of dealing with debts once they start getting out of control. It is not something to be undertaken lightly, as it can severely harm your ability to get credit in the future, at least until your debts have been cleared. However, people with problem debt levels often have impaired credit in any case, so this may not be an issue.
The basic process of debt management is to renegotiate your repayments to your creditors, with the aim of lowering the amount you have to pay each month. Often, a creditor will be willing to negotiate a lower repayment amount rather than risk you defaulting on the debt completely.