Is your personal debt spiralling out of control?

How an unsecured loan could actually help you get out of debt!

Have you noticed how debt has become the new taboo subject? People are no longer afraid to discuss politics, religion, sex, health issues or even death. But debt? No way!

This may be because there is a debt epidemic in the UK. Up till recently this has been a silent epidemic. Many of us are affected but few have the courage to speak out, because being in debt brings a great sense of shame – even when it is due to circumstances beyond your control.

If that’s how you’re feeling, listen to this: Recent Bank of England data shows that personal debt in the UK is now at its highest level since December 2008!! It has been growing at a yearly rate of 10% for the past six months and now stands at £192.2 billion.

The Bank of England defines personal debt as debt including credit cards and bank loans but not including mortgages or student loans. Debt counsellors say that many of us are now using credit cards to pay for essential living costs, rather than luxury items. With inflation set to rise in 2017 things can seemingly only get worse.

So if you are part of this silent epidemic, what can you do to get out of it?

We recommend a four-step approach:

STEP 1 – Face up to your situation
When you’re in debt it can be tempting to try and ignore it and hope it will all sort itself out. But while you are in this state of denial the debts just keep on mounting up and there is a sense of powerlessness that you will ever be able to do anything about it. So the first step is taking a deep breath and making a list of every personal debt that you have – loans, credits cards. You need to know how much you owe overall and the total amount you are paying each month in repayments. The figures might be a shock, but you need to know what you’re up against.

STEP 2 – Make a budget
The next thing to do is make a realistic budget for everything you need to spend each month. Our recent blog Budgeting for Freedom goes into this in more detail, but the key thing at this stage is to know how much you can comfortably afford to repay each month to clear your debt, whilst still having enough money to meet the rest of your financial obligations – rent/mortgage, bills, food etc.

STEP 3 – Consolidate your existing debts into one
Once you know how much you can afford to pay each month to clear your debt, you could then find an unsecured loan to consolidate all your existing debts into one monthly payment. Find a lender you can trust and who can help you by arranging an unsecured loan over a repayment term that is affordable for you. By doing this you will be able to clear all your existing debts and will just then have one affordable monthly payment to make instead of juggling several different payments around.

STEP 4 – Give it everything you’ve got!
Once you’ve done all the above you are well on the way to financial recovery but don’t get complacent! You will need to stay focused to make sure that you keep things moving forward. You will need to keep living by your budget and make sure that you do not take on any more debt. It’s a good idea to lock away the credit cards to help you make sure you no longer spend money that you do not have. Also do everything you can to increase the amount of money coming in to strengthen your longer term financial position. Whether this is a new job, extra work, taking in a lodger, selling things you no longer need… the details are up to you to sort out depending on your individual circumstances but you do need to turn things around so money is flowing in rather than flowing out!

Whatever this year may bring in terms of the UK economy, it can be the year when you turn your finances around. To find out more about an unsecured loan and how Loans 2 Go can help you get out of debt why not get in touch with us today to get things moving in a positive direction!