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UK debt grows daily and is the result of excessive
spending on credit and store cards. Easily obtainable
personal loans and secured loans don’t make
life any easier when it comes to overcoming UK debt.
Spending is always easy, and with out doubt it is
done many times with out thought or regard for the
situation of the individual. Buying those new clothes
or the latest PS3 is cool but eventually the pennies
have to be counted as the debt continues to grow and
are not reduced.
How do we overcome this debt in the UK?
A number of options exist but the preferred method
should be self help budgeting which involves the person
in debt overcoming all debt issues themselves.
It has been suggested that the route by which you
clear your debt should be done through a top down
approach.
The top down approach to debt is the process of clearing
your debt one at a time, but clearing the highest
interest earning account first. Once cleared you move
on to the second biggest interest earning debt and
clear that. By following this method you are reducing
the amount of interest you pay on your debt, therefore
maintaining the lowest level of debt possible. Each
month the lowest amount of interest will be added
to your debt and so will help you reduce your overall
debt quicker.
With this approach you are able to gradually increase
the amount you pay off each debt and therefore the
clearing of debt snow balls the more debt you pay
off.
As you clear the first highest paying interest debt,
move to the next, but as you are now no longer paying
a minimum payment on the first debt you add this payment
to the amount paid to the second debt, together with
its minimum payment and the over amount you are using
to pay off the debt quicker. And so on, the rate of
clearance of the debt increases the more debt you
pay off.
Debt in the UK can be treated in an identical way,
overcome UK debt is the same. Use the top down approach
if you are able. Identify your highest interest earning
debt and attack this one first.
"The amount owed has no real bearing on anything
when you have a large amount to repay as the interest
accruing each month keeps that debt high. Try to pay
off the biggest interest rate debts first. Get as
much funding together as possible and rid yourself
of that weight around your neck and overcome that
debt.
There may be reasons that don’t help with this
method of payment, perhaps the amount you are able
to afford towards the payment of the debt is minimal
and seems to have very little effect on the debt.
An alternative is to use the opposite effect to
overcome UK debt. This involves the bottom up approach
to overcoming debt.
Bottom up approach to debt is simply taking the
debt with the smallest interest rate and paying that
off first. The idea behind this repayment method is
that by paying off a couple of debts which don’t
grow monthly on the scale of the larger debts, this
will provide a larger margin of cash through which
to pay off the other debts and will encourage you
to keep at it, having removed a couple of debts already.
Knocking off lower interest rated debts first offers
encouragement to the person and so ensures they maintain
there drive to rid themselves of debt.
An alternative to both types of repayment is to
pay off the largest debt. No matter what the interest
rate is the large debt always carries the largest
headache and the largest repayment due to the natural
size of debt.
An example 30% of £300 owed is less than 10%
of £10,000
So an alternative could be to throw all your excess
cash at the largest debt and therefore remove the
largest headache.
It is important that no matter what plan you choose
you must stick to it, no matter what, or the interest
will keep on coming and the debt reduction process
will not take place.
Overcome your UK debt today and if you are having
difficulties to do this through your own self help
methods then contact a professional at Finance INC
for help.
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