Are You In Debt?

Its well documented in the press that 2008 is going to be a tough year for consumers. With the global credit crunch in full swing, and two of the worlds leading economies teetering on the edge of recession, its no wonder that consumer debt issues are in the public eye.

Reasons for consumer debt
There are many contributing factors to the rocketing consumer debt the UK has experienced in recent years. Many experts consider previously cheap and easy access to personal credit, changing consumer attitudes and rapid increases in property prices as key drivers. However, the recent credit crunch has left many consumers vulnerable, particularly those in debt, with some feeling completely out of their depth.


Is your debt unmanageable?
Most of us will have some level of debt in our lives, be it car finance, a catalogue account or an emergency credit card. There is, however, a large difference between been a small amount of debt and unmanageable debt.

To identify whether your debt is unmanageable, ask yourself a few questions:

- Do you struggle to pay your bills on a monthly basis?
- Does a large proportion of you income go towards repaying the monthly interest on your debts?
- Do you feel uncomfortable with the amount of debt you have?

If youve answered yes to any of these questions, its possible youve got debt problems that need immediate attention

If it is - dont panic!
Recognising that your debt is unmanageable is one of the key steps to getting your finances back in order. There are a few options you should consider when dealing with your debt, but there is one thing you should do before going further . . .

Prepare a financial statement
A financial statement will let you see your exact financial situation and be a valuable resource when dealing with your debts.

The financial statement is simply a record of:

- your income
- your expenditure
- your disposable income
- your assets (things you own i.e. your house)
- your liabilities (what you owe & to who)

You might find it useful to do this in a spreadsheet so you can update it more easily.

Once youre armed with a true picture of your financial situation youll be in a much better position to make decisions on how to move forward with managing your debt.

By: Melanie Taylor

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Dont panic if you are in debt. There are many solutions available to you, including debt help and advice from national charities & professional debt advisers. It may be that you can manage your debt on your own. Alternatively, you may want to opt for a debt management plan, debt consolidation or IVA.