Debt

Uncontrolled debts are a worry, no matter how hard you try not to think about them. But putting off addressing them costs you money in interest and charges while robbing you of your peace of mind. So decide that you are going to face them head-on and take action sooner rather than later.

• Make a list of your debts, and the amount of interest you’re being charged on each one (be brave, this could get depressing).
• Prioritize paying off those debts with the highest interest rates, and move all you can to a zero-percent interest credit card. Be aware that this rate probably won’t last forever.
• Keep one or two credit cards and cut up the rest.
• Set realistic goals for paying off debts and starting to save.
• Beware of the lure of Internet shopping.
• Think about increasing your hours at work, selling some valuables, or renting out the spare room.
• There are plenty of sources of good, expert, and free advice, so take advantage of the help that is available.

Money Do’s and Don’ts

Do

Draw up a budget and stick to it. Keep your creditors informed in advance of any changes to your repayments. Get advice: There are a number of places which offer help before, during, or after you get into difficulties. Many of these services are free.

Don’t

• Don’t borrow money at high rates of interest to clear debts that you cannot afford.
• Don’t draw up an unrealistic budget.
• Don’t bury your head in the sand when you receive utility or credit card bills; you may damage your credit rating.
• Don’t turn to unhealthy coping behaviors to numb your anxiety, such as drinking, smoking, or overeating. This will only lead to more stress.

References and other resources

Moneysavingexpert.com (heavily UK)

Tips for Solving Money Problems

Budget-making tool

Money101

    Last reviewed: By John M. Grohol, Psy.D. on 27 Jun 2007
    Published on PsychCentral.com. All rights reserved.