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Being in debt costs money. The more you owe, the more interest and other charges you pay. That’s why minimising debt is essential for your financial wellbeing.
You can be in debt but still be financially healthy. Many people have unavoidable debt like a mortgage or car finance. The key to debt is to borrow only what you can afford to pay back and avoid excessive borrowing.
This is any debt that you can’t comfortably manage. Look out for these signs:
If you don’t have money to cover costs like food and bills, you have a debt problem. Consider a short-term or payday loan and try to reduce your spending.
If you have to borrow money repeatedly and regularly, you may have a debt problem. Set a budget and stick to it so you can cover your expenses.
Another sign of excessive borrowing is if you have more than one credit card and can only afford to make the minimum required payment each month.
Using cash advances from credit cards to pay bills could seem like a manageable solution in the short term, but it’s another sign that you’ve borrowed more money than you can comfortably afford to pay back.
Avoiding excessive borrowing can be difficult, especially if you can't cover your monthly costs. Explore these options to improve your debt situation.
Many people are struggling with debt after buying things they want but can’t afford. Anything from a big house to a daily meal at a restaurant. If this sounds like you, think of ways to reduce your spending.
You may feel worried about opening up to your bank, but in many cases, they can offer you help and a way forward. This could include a short payment holiday, freezing the interest on your borrowing for a while, or amending the terms or interest rate that you’re paying.
If you have multiple debts, it could be cheaper to combine these into one loan if it means paying a lower interest rate. Consider the fees and costs associated with repaying or consolidating your loans and whether you could end up paying less overall. See our personal loan repayment calculator.
If you feel your debt is getting out of control, consider seeking specialist help from a free debt charity or related organisation.
Find out more about how to manage your debt.
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