We’re all in debt to some degree. Many of us have mortgages, credit cards, car loans, and so on, but the key to financial freedom is to free ourselves of our debts as soon as possible.
Unfortunately, many of us become trapped in a cycle of debt, so it’s important to find a way to remove ourselves from this cycle before we damage our financial position further. One of the ways to do this is to look at the issues that could be driving us further into the debt trap.
These often include the following, so have a read, especially if you’re currently struggling to manage your debts.
Banks have long been blamed for getting people into debt. With loans that come with whopping great interest rates, overeager bank tellers persuading us that a loan is just what we need, and hidden clauses in the small prints of our loan agreements, many of us can look to our banks as being the cause of our debt. These are just a few examples, but DTSS addresses the banker rip off further, so have a read.
Bank fees are one of the reasons why many of us struggle to get out of debt. When we are late with our loan payments, we are slapped with fees. These can be quite high, so paying off our debt can become harder.
However, banks also make mistakes, and they do neglect to remind us of the fees in the small print of loan agreements, so if you don’t feel you’re at fault, you do have the right to challenge your bank and get legal advice. In some circumstances, your bank might lift the fee.
So, our advice is this: Check your bank statements and if you have been charged a fee you aren’t sure about, challenge it. And make sure you make those minimum payments, perhaps with a direct debit to avoid any charges.
Poor money management
If you don’t manage your money well, two things might happen. For one, you might get to the end of the month without the money you need to make your debt payments. And two, you might be tempted to take out a top-up loan to cover your debt payments.
The key to avoiding both is to manage your money better.
Using our budgeting tips, work out how much you have to spend each month. This will be the figure that comes after you have worked out your expenses. When you know how much you have to spend, you won’t be tempted to buy those items you don’t need, so there will be less chance of you running out of the money you need for your loan payments.
If you do have excess money, don’t spend it all either. Put it away into an emergency fund, because if disaster does strike at home, you won’t have to use the money that goes towards your loan payments to get you out of trouble. You won’t have to take out another loan either if you have an emergency fund in place.
By managing your money better, you will be less likely to incur bank charges through missed payments, and you won’t need to rely on other loans to dig you out of trouble, so heed our advice and get help if you need it.
So, don’t let these issues keep you in debt. We haven’t covered everything here, so look around our site and elsewhere online for other advice. And if you need to, speak to a debt charity for expert advice on how to manage your financial situation.