New Year, new start, let’s face those debts

Facing up to debt is never an enjoyable task. There are many people and services that would like to help, but ultimately it has to start with you breaking down and scrutinizing your personal finances. It may help to keep an eye on how much you are spending monthly, weekly or even daily, or work within a set budget to help ensure you always make that unsecured loan or mortgage repayment.

The NatWest have launched a helpful tool called the ‘Debt Calculator’ which helps you to work out exactly how much debt you owe. It helps further, by breaking down your monthly finances and breaking down debts into more manageable monthly sums.

Firstly the Debt Calculator will work out exactly how much debt you owe. So this is the time to enter all the debt you have including all credit card balances, unsecured loans and overdrafts. Some people don’t even count overdrafts as debt, as they live off them every month! Then you need to set how much you can realistically afford to pay back each week or month, and even set a debt free date, so a date when you will owe nothing. The calculator will then work out the amount you need to pay within the criteria selected.

As a guideline this tool is excellent. It will help you to visualise some realistic goals as smaller payment plans and should not be too overwhelming as one big lump sum. Facing up to what you owe, and understanding what you need to pay and when is a positive first step in understanding and overcoming debt.

Once you have worked out your monthly repayments you need to prioritise your debts to become debt free. The debts with the highest interest rates need to be the first priority, and always ensure that you make repayments on time to avoid further damage to an already fragile credit score. A lot of lenders offering the best deals now penalise you if any payments are missed by removing any promotional rates or special offers.

Facing up to dent might be hard at first, but by staying organised, breaking it all down and trying to understand it you will be able to tackle your debts one step at a time.