Four debt tips for Scottish residents
1. If you do have to borrow money, make sure you can afford the repayments.
2. Don't gamble on your circumstances improving in the future.
3. If you're struggling to repay debts, tighten your belt.
4. Seek professional help if you're struggling with repayments.
'Only borrow what you can afford'
Anything you borrow is debt, so work out your repayments and how you'll afford them before you borrow any money.
To help you do this you'll need a realistic budget. Your budget should include every source of income that you have every month as well as everything you have to spend every month.
Your essential expenditure includes your rent or mortgage, utilities and food, transport to and from work, and other things you need for your family.
These are your priority bills. Your debt repayments should never leave you unable to afford these bills. So before you borrow any money, you should make sure you can afford your priority bills as well as any repayments that you sign up to.
'Don't gamble your future'
Sometimes people take on debts that they cannot really afford, in the hope that their income will improve in the future because:
- They assume they'll be earning more in the future.
- Existing loan repayments will end, leaving them with more disposable income.
- They predict their mortgage payments will decrease.
- They're counting on a bonus at work to cover their bills / other essentials.
The trouble is, there are no guarantees in life. In this financial climate of pay freezes and unemployment, plus the additional risk that anyone's circumstances can change (redundancy, illness, divorce, etc.), you shouldn't gamble with your financial future.
'If you're struggling to repay debts, could you tighten your belt?'
If you're struggling with your repayments, look again at your budget. Are you overspending and could you cut back on anything? Sometimes a bit of belt-tightening is all it takes. Look at where you can cut back. Sometimes it's possible to find a better deal on car insurance, utility bills and other essential expenses. And unfortunately, any non-essential luxuries might have to go.
'Seek professional debt advice when you need it'
If you have tried cutting back on your spending and you're still struggling with debt repayments, then you should think about getting some professional debt advice.
The debt help that's available will partly depend on where you live. For example, residents of Scotland could be eligible for a Trust Deed if they have debts that they can no longer afford, although they'll need to understand how it'll affect their credit rating before they commit themselves to anything. If you'd like to know more about the pros and cons, you'll find some Trust Deed advice on the Debt Advice Team website (they're the ones who provided this article).
Sometimes taking the first step is the hardest part, but if you are already struggling to afford your repayments, finding the help you need could take a real weight off your shoulders.
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