When should I seek debt advice?
Estimating the extent of your own debt can be a difficult task, let alone deciding which debts are the ones causing you the most problems.
However, not all debts are problems. When used sensibly, loans, overdrafts and other forms of credit can often be a useful way of raising money.
Problems can soon occur, however, if you borrow too much and/or cannot afford the agreed repayments. One of the reasons why debt can become a problem is due to the interest you could be paying on it.
Any debt can become a problem. When this happens, it is time to seek advice and, if necessary, find out about the debt solutions that could help you become debt free.
Should I worry about my student debts?
Although students do worry about their debts, it is important to remember that the loans provided by the SLC (the Student Loans Company) are designed to be paid back in relatively small amounts over a long period of time. At the moment you will not be required to make payments until your annual salary is over £15,000.
If your debts are in the form of credit cards and overdrafts, however, you should aim to repay these as soon as realistically possible. They may have a low interest rate at the moment, but that's not likely to last forever.
In an ideal world, you should try and steer clear of this kind of debt in the first place - you may be able to avoid it by controlling your expenditure.
Debt checklist
If you are unsure about your finances, and don't know whether you have too much debt, then you need to ask yourself a few simple questions, such as:
- Have my creditors been in touch about outstanding debts that I cannot afford to repay?
- Is my credit card balance higher than it should be?
- Are my debt repayments taking up a great deal of my income?
If you find that you can answer 'yes' to one or more of these questions, then it means you are probably in too much debt. You should start by creating a budget (a record of how you normally spend the money you receive) for yourself - and if you don't think you can cut back/earn enough, you should consider seeking professional debt advice.
Where is the help available?
There are various debt management organisations which could help you get out of debt. The right debt adviser may be able to suggest ways you could manage your finances better.