How To Get Out Of Debt – Expert Financial Advice From John Mansworth

Step one: Work it out

Sit down and work out how exactly how much you owe and who you owe it to. Be honest or you’ll only store up more problems for the future. If your debt repayments take more than 20% of your net monthly income you are entering a danger zone and must take steps to cut back.

Step two: Budget

Once you know how much you owe you can draw up a budget, including a schedule for repaying your debts. Be realistic and work out what you can afford to repay and still stay within your budget.

Step three: Be disciplined

Don’t borrow any more money or take on any more debts until you have repaid what you already owe.

Step four: Watch your daily spending

Take a set amount of money out of the bank at the beginning of the week and give your card to a friend or family for self-keeping. That way you cannot spend more than you have in cash.

Recession is here and households across the Ireland are starting to feel the impact. Whether it’s job security, indebtedness, mortgage affordability or the security of savings, few people have not been affected by the financial crisis.

Step five: Organise your bills

Make sure you are paying all your utility bills by direct debit. It’s much easier to manage as you won’t have to worry about sending cheques on time and it is also cheaper as most providers offer discounts for direct debit payments.

This is probably the easiest way to cut your bills. You can do it today simply by calling your bank with the details of your energy suppliers. Or, alternatively most energy bills enclose a form to fill in to set up a direct debit.

Step six: Switch your utility Suppliers

You could save hundreds Euros each year on your gas, electricity, water and phone bills by switching. It is advisable to switch your energy and phone suppliers before you set up direct debits or you will end up having to change them again.

Step seven: Switch to a cheaper credit card/loan

Try different providers and you’ll probably be able to find a credit card or loan with a better rate than you’re paying now – particularly for transferred balances on cards (watch out for balance transfer fees). But remember that these special offer rates will rise considerably after an initial interest-free period – make a note in your diary to change deals again. It’s best to go for a low rate that looks stable rather than 0% for a limited period, unless you’re happy to switch again in six months.

Step eight: Cut up store cards

Store cards charge by far the highest rates for credit, so if you’re finding it hard to manage these debts throw away your cards now to avoid temptation.

You’ll pay well over the odds for most store cards – it’s better to pay cash if you can. For those items you can’t pay cash for, shop around for the best deals – the market is competitive, so there are some excellent interest free credit offers around. It is also worth taking a look on the internet as many products are offered there more cheaply.

Step nine: Sort out your bank account

If you’re a customer of one of the main banks then you might not getting the best deal on your overdraft or interest rates. The rise in the number of internet banks means there is far more choice, so it might makes sense to switch and take advantage of offers such as fee-free banking and lower overdraft rates but you lose the comfort of being able to sit down with a bank official face to face. You could save yourself a lot of money just by switching to a new current account.

Step ten: Switch your mortgage

The mortgage is probably your biggest expense each month, so it’s important to ensure you have the best possible deal. Speak to an independent financial

Adviser or a broker about your remortgaging options, and if it looks like you could save money make the switch.

Remember to take into account any transfer charges from your current provider and any legal fees for switching. Weigh up the all-in cost of remortgaging before you decide if it’s worthwhile, you may still find that the savings you’ll make with a new mortgage will more than cover any transfer expenses.

Contact John Mansworth of Morrison Mansworth Financial Services for a Full Financial Review(Free of  Charge) 087 958 4676/ johnmansworth@gmail.com

And one for luck: Review Protection policies

Life Assurance policies are a must for people with or without mortgages, it is essential that people plan for future contingencies for themselves and their families. Shop around for these policies as their can be huge price differences from company to company.