Guarantor Loans: Helping to Reduce your Debt Burden

Debt Help

Left unchecked debt can take over your life - so it isn't just a financial problem. Don't let your existing debt turn into a debt crisis. To do this you must confront your debt situation.

A Plan to Reduce Debt

Your objective must be to:

• Start budgeting - reduce your spending to be less than your income. Look at what you spend each week/month/year on different items (e.g. energy, food, clothes, etc), and identify where you can reduce costs. This might be as simple as finding it cheaper elsewhere. Once you've done this stick to your new budget rigidly.
• Change expensive debt into cheaper debt - some debt is more expensive than other debt, and there is no reason why you shouldn't be able to swap one type for the other. This can be considered debt consolidation, where you pool your existing expensive debt into a cheaper loan - but watch the length of your loan and think about the total interest cost of any alternative you might consider. Our guarantor loans are often used for debt consolidation.
• Pay off debt - if you have savings then the liklihood is that the interest you are earning on this will be less than the interest you are paying on the same value of debt. If this is the case you should use your savings to pay off a portion of your debt - if you ever need cash for an emergency you can always use a payday loan cash advance or a credit card.

If you are budgeting successfully and your spending is less than your income then the surplus income every week/month can be used to gradually pay off your debts. Over time a modest debt problem can be sorted out using techniques such as these. If you think that your debt problem is too big to handle in this manner then debt management techniques might help

Tips to help you reduce your spending and debt:

1. Check whether you're entitled to any additional benefits such as Job Seekers Allowance, Maternity Benefit, Income Support or Working Family Tax Credit.
2. Check whether you're entitled to any help with rent or Council Tax.
3. Cut down on the usage of electricity by not leaving appliances on stand-by. Switch off lights when not in use. Lower thermostat on radiators to reduce heating costs.
4. If you are unemployed or unable to work through illness check if you have payment protection insurance on your mortgage, loans or credit cards, you may be able to have your payments made for you.
5. Supermarkets own brands can often be just as good as the well-known brands but cheaper.
6. Shop once a week and plan your food. Preparing packed lunches could save around £50.00 per month. Freeze left over food and re-use.
7. Cut down on eating out, take-aways, and nights out.
8. Drive a small economical car and save on insurance, tax and fuel.
9. Instead of using the car for short journeys, consider walking, using a bike or public transport.
10. Use your local library for books, CDs, DVDs and videos.
11. Enjoy family activities that don't cost money. Museums, galleries and parks are free and make great days out.
12. Don't browse around shops and stores, make a shopping list and stick to it.
13. Try to cut down on cigarettes or, if you can, give them up completely.
14. Sell unwanted items in the local classifieds or on the Internet - many newspapers offer free advertisements.
15. Look how to gain study grants. You may be able to study part time to improve your prospects while you work.
16. Research childcare in your area. There maybe council/church run nurseries and sometimes grants are available. Use family whenever possible for baby-sitting.
17. Check for better work opportunities closer to home. Consider the additional costs of your job e.g. childcare, travel time and expense.
18. Reduce monthly subscriptions to mobile phones, Internet and Sky television.
19. Take holidays at off-peak times and choose less expensive packages e.g. self catering.

Debt Crisis

If you can't meet your minimum debt repayment obligations then you are almost certainly in a debt crisis. In this situation there are a number of free debt services you can take advantage of that can provide proper advice.

• CCCS (Consumer Credit Counselling Service) Free telephone number 0800 138 1111 open 8am to 8pm Monday to Friday; or
• The National Debtline can give free advice and provides information packs on dealing with debt. Their debt lines are open from 9am-9pm Monday to Friday and from 9.30am to 1pm on Saturdays. The National Debtline phone number is 0808 808 4000; or
• Your local Citizens' Advice Bureau

In these situations the solution to your debt crisis will be radical - something like a Debt Management Programme, but it could be an IVA or Bankruptcy.