information around debt

In the UK, the average household debt is about 56,000 pounds, including the mortgage, although many people of course, owe far more than that.

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What Causes Debt?

Debt can be caused by many factors, including not enough income, too many expenses, a costly divorce, and poor spending habits. It is easier than you think to go into debt, especially after losing your job which can be caused by downsizing, discrimination at work, or your workplace role being replaced by technology. And these days, it is all too easy to get a credit card and make poor decisions when using it; the interest rates on most cards can cause many card owners to struggle financially, and if you simply pay the minimum amount due, it can take years to pay off the balance. Student debt is another big problem for many younger people, along with the very real challenge of trying to find a well paid job on leaving university.

Preventing Debt

Many people find that preventing debt is easier said than done, although there are steps you can take. If you have a credit card, don't be tempted to use it for everyday items such as groceries and petrol; keep it only for a financial emergency. If you are struggling with too much debt, it is worth looking at all your bills and see if they can be lowered or even eliminated altogether, such as car insurance, mobile phone plan, gas or electricity, and of course your grocery bill. if your mortgage payments are contributing to your being in debt, contact your mortgage lender to see if your interest rate can be lowered, or your terms favourably adjusted. A good rule of thumb is to only buy what you can actually afford at the time without going into debt and taking out a loan, whether it's a new TV or piece of furniture, or a holiday abroad. And it is all too easy to lend money to friends or family, although you may want to reconsider if you realistically just can't afford it or aren't sure if you will get it back.

Getting Out of Debt

Reversing the problem of dent can take perseverance and hard work. It can mean taking a close look at your lifestyle and spending habits, and perhaps giving up holidays, meals out or spending less on groceries or food. Some people understandably need help or counselling in order to tackle their debt problem, or choose to use the services of a debt settlement company. These companies will contact your creditors to negotiate lower payments, or in some cases write off some or all of what you owe. If you owe thousands on your credit card or unsecured loans, this can be a practical and effective solution. However, if you have a lot of debt, you should be wary of offers for unsolicited loans that often come in the post, as the interest rate on these can be extremely high, and can actually make the debt worse instead of solving the problem.