How to Prioritise Your Debts
Being stuck in an endless cycle of debt can be stressful, take a look at our advice on how you can manage your debts better.
Small steps can make a big difference
If you have multiple debts, it can be difficult to know where to start. Should you pay off the debt with the highest interest rate first? The one that’s costing you the most money each month?
The answer is: it depends. There are a few different ways to prioritise your debt, and the best method for you will depend on your individual circumstances.
If you’re struggling to make the minimum payments on all of your debts, it might be a good idea to focus on the debt with the highest interest rate first. This will save you money in the long run, as you’ll be paying less interest overall.
If you’re able to make more than the minimum payments on your debt, you might want to focus on the debt with the lowest balance first. This will help you to get rid of your debt quicker, and it can be motivating to see your debt decrease each month.
Whichever method you choose, make sure you stay organised and keep track of your progress. Write down your debt payments each month, and create a debt repayment plan that works for you. debt, manage, finances, money, interest rates, organisation
Debt can be a difficult topic to talk about, but it’s important to be honest with yourself and figure out the best way to deal with it. If you’re struggling to make the minimum payments on your debt, it might be a good idea to focus on the debt with the highest interest rate. This will save you money in the long run, as you’ll be paying less interest overall.
You should always focus on priority debts first – these include debts such as rent, HMRC debt and council tax. Not paying these debts could lead to more severe penalties that other debts such as loans and credit cards.
The single most important piece of advice would be to not bury your head in the sand and talk to your creditors about the debt, in almost all circumstances they will want to help you.
How to Prioritise Your Debts
Which debts should I pay first?
You should deal with priority debts first, these include debts such as rent/mortgage, council tax and and monies you may owe HMRC.
Where can I get debt support and advice?
There are may debt support organisations in the UK. We recommend both Stepchange (https://www.stepchange.org/ or 0800 138 1111) and the Citixens Advice Bureau (https://www.citizensadvice.org.uk/ or 0800 144 8848).
My debts are overwhelming me, what can I do?
Being in debt is nothing to be ashamed of - at the end of 2021 the average total debt per household in the UK was over £63,000. You are not alone and there is support available. You should speak to your creditors in the first instance to arrange an affordable repayment plan or speak to one of the free debt charities listed above.
Should I take a loan out to repay all of my debt?
As a rule, borrowing your way out of debt rarely ends well and it's not recommended. Consolidating debts is a good thing to do but you must ensure you're disciplined enough not to simply run your old debts back up again.
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