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Short term debt problems are manageable problems associated with
Temporary job loss, sickness, a large one off payment which may
leave you short for a month or two or you just have a lot of small
out of order debt, which you need to take control of.

Below are just a few things to take into consideration when
evaluating your credit situation.

Prioritise your Payments

Prioritizing your payments is a very important step. You must
choose the creditors that are most important to you e.g. your
mortgage payment and your utility companies.

Next are the credit cards and store cards which charge the most
interest, by paying off the cards with the most interest you can
reduce the amount of interest calculated on your next bill.

Transferring your credit card balance onto another card, with a 0%
interest period is also a recommended action. This allows the full
monthly payment to be deducted from your balance, without
incurring any interest.

Always remember to pay off your debt with any available money
you may have at the end of each week/month. Doing so prevents
any arrears and a build-up of interest on credit cards and store
cards.

Can you improve?

Improving your situation is one of the best ways to acquire extra
money. Try to think of ways to maximize your full income e.g. is it
possible for you to work more overtime, can you claim any benefits,
and do you have anything of value to sell? Also can you afford to
cut back more? A drastic measure is to move to a smaller house
and pay less mortgage or less rent, however this is a worst case
scenario.

Contact your creditors

If you are experiencing money problems, do not be afraid to contact
your creditors as they will try to help you. Due to the process the
creditors have to go through to get money from you if you do fall
into serious money problems, it can work out quite expensive to
your creditors. Contacting them could lead to negotiating a new
payment plan.

Before contacting your creditors, make a comprehensive list of all
the outgoings and a realistic amount that you can pay each month.
After you have completed a list of out goings, make a list of all
creditors remembering to prioritize from most important to least
important. Upon completion of this list, prepare a formal letter
explaining your situation and proposing your payment plan.

When you receive confirmation/acceptance of your proposed plan
(or something close to it) always keep your creditors informed of
your progress. This process is a long drawn out process and you will
have to prove to your creditors that you are struggling with the
upkeep of your payments.

Cut backs

You will be surprised on what you can save on when you cut back.
Make a list of all of your current out goings, this includes all your
shopping, hobbies, magazines, news papers, treats, everything.
When you have produced your list, take a look at it and remove all
essentials

From this list also look at the brands of shopping you buy, you can
save money buy using a cheaper brand.

The items you have left on your list are obviously non essential to
you, therefore can be excluded from your weekly/monthly
expenditure. You will be surprised to see how much you can save
from this simple money saving technique. However you do have to
be tough on yourself when excluding non essential things, think to
yourself “do I really need it.”

Choose the best rates

If you still have a good credit score and still have the ability to be
accepted for a loan, then try switching your outstanding credit to a
new loan or credit card.

Search the internet, local papers and magazines, even keep an eye
on the adverts on your TV, there are hundreds of creditors offering
0% interest on credit cards. Try doing the same for loans too. It is
very unlikely you will find a 0% interest loan, however there a lot
out there with rates from 5-9%.

Switching credit cards and loans will save you money on increased
interest rates. Look at the big picture over the long term; you will
save £100s on interest.

Consolidate through your mortgage

It is possible for you to consolidate your debt on to your mortgage.
However doing so does increase the interest you will pay drastically.
Imagine you have debts of £10,000 over a five year period. You
wish to add this to your mortgage over a period of twenty years.
The interest accumulated over five years will be significantly less
than the accumulated interest over twenty years.

You must also be sure that the value of your property is significantly
more than the amount of your mortgage. Negative equity on your
home can lead to problems.

Consolidate with a loan

Consolidate through a loan. Quite like putting all your eggs in one
basket so to speak. Then there are a few scenarios you may want to
consider:

· How much do I want to pay out?
· Do I want to take the loan over a shorter term and pay my
debt back faster?
· Do I want to take my debt over a longer term, pay more
interest but take a lower payment?
· Am I going to stick to the loan and not get into more debt?

If you are aware of these simple scenarios then a consolidation loan
is recommended. It is cheaper due to one amount of interest paid
instead of multiple amounts. Also you will find your money easier to
manage due to the one single payment every month/week.

Do pay particular attention to the term of the loan you require, it is
better to pay the loan back sooner rather than later. Try to find an
amount you are comfortable with. It is easy to take the lower
payment over the longer term, which allows you to have more
expenditure. However, is this option a sensible one? More interest,
longer term, more to pay back. You would be better with shorter
term, less interest, less to pay back.

This entry was posted on Monday, August 27th, 2007 at 8:19 pm and is filed under Debt Consolidation Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.