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Debt isn't necessarily a problem. When used wisely, things like a loan or overdraft can be a useful way of raising money.

However, problems can occur if you borrow too much and/or can't afford the agreed repayments. One reason debt can become unmanageable is due to the interest you may be paying on it. All too quickly, 'good debt' can become 'bad debt'.

When this happens, you should take action by seeking debt advice and, if necessary, finding out about the debt solutions that could help you become debt-free.

Should I worry about my student debts?

As a student (or graduate), it's always a good idea to keep a close eye on your finances. Your student loans (provided by the Student Loans Company - SLC) are designed in a way that allows you to pay them back in relatively small amounts over a long period of time. At the moment, the SLC won't require any repayments unless your annual salary is over £15,000.

However, if your student debts are from overdrafts and credit cards, you should try and pay these off as soon as you can. They may be 0% or low-interest now, but that probably won't last forever.

Am I in too much debt? The checklist.

If you can answer 'yes' to any of the following questions, then you probably have too much debt:

• Are my debt repayments taking up a great deal of my income?


• Is my credit card balance always high?


• Have my creditors contacted me about outstanding debts that I can't afford to pay?

If you find that you are in too much debt, you should start by assessing your budget (a record of how you normally spend the money you receive) and trying to earn more and/or spend less, as this may be all you need to start getting out of debt. However, if this doesn't look like it will be enough, then you should seek professional debt advice.


The right debt adviser should be able to offer you tips on how to manage your finances more successfully.]]> http://www.invidion.co.uk/financial_tips.php?entry=10
Debt only becomes 'bad' when you have borrowed too much and/or cannot afford the repayments. Interest is one factor that can cause your debts to spiral out of control and become unmanageable.

However, help is available, and the right debt advice and/or debt solution could set you on the road to financial stability.

I'm a student: should I worry about my debts?

Your student loan (provided by the Student Loans Company) is designed to help you through your student life, without putting you under pressure for repayments until you're earning enough. You will only start repaying your loan when your annual salary is £15,000 or greater.

However, if your debts are in the form of overdrafts and credit cards, you should aim to pay these off as soon as realistically possible. If you can, try to avoid these types of debt in the first place (by controlling your expenditure).

How do I know if I'm in too much debt?

Are you unsure if you are in too much debt? If so, then you need to ask yourself a few simple questions, such as:

1. Have my creditors been in touch about missed payments?
2. Is my credit balance high (or getting high)?
3. Are my outgoings greater than my income?
4. Is it impossible for me to save money each month?

If you find yourself answering 'yes' to one or more of these questions, then you should create a realistic budget for yourself - and consider seeking professional advice.


Where can I go to get the help I need?

There are many debt management organisations which could help you get out of debt. An experienced debt adviser will provide advice and may be able to help you identify the debt solution that's right for you.]]> http://www.invidion.co.uk/financial_tips.php?entry=9
For some people, a debt management plan is an ideal way to repay debt at a more manageable pace. However, as with any debt solution, it's important to understand what's involved before making a final decision.

Quick guide to your debt management plan

Basically speaking, a debt management plan is an informal arrangement with your creditors in which you will agree to repay your debts in smaller monthly payments than those set out in your original terms.

It's possible to arrange a debt management plan on your own, but this can require a lot of negotiation with your creditors, which can be time-consuming and stressful. For this reason, many people prefer to use a debt management company, who can arrange the debt management plan on your behalf.

As well as negotiating for lower payments, it's often possible to negotiate a freeze or reduction in interest and other charges, which can help to stop your debt from growing any bigger and help you to repay your debts in the fastest possible time.

Will a debt management plan work for me?

As with any debt solution, it may be that a debt management plan is not suitable for your particular circumstances. Your debt adviser will discuss your situation and help to establish which debt solution would best meet your needs.

In general, a debt management plan is best for people with multiple debts who are having trouble with meeting their required payments, but feel they would benefit from repaying their debts at a slower pace.

However, if it seems unlikely that you will be able to repay your debts within a reasonable period of time, then another debt solution such as an IVA (Individual Voluntary Arrangement) may be more suitable.]]> http://www.invidion.co.uk/financial_tips.php?entry=8
The 'credit crunch' and the subsequent economic downturn has changed that. According to expert economists, we are now potentially facing the most serious recession since the Great Depression of the 1930s, with varying predictions as to how long it will take us to get out.

What has caused previous recessions?
In short, the last three recessions were caused by high inflation. Prices of goods and services had simply grown too quickly to be sustainable, which eventually led to lower levels of consumer spending. This hit businesses hard, and set off a chain reaction of businesses going bust and unemployment. It took the UK around two years to get out of the last recession.

What caused this recession?

This recession is somewhat unique, in that it was not caused by inflation. Instead, the credit market had grown too quickly - mainly due to very high levels of lending over a number of years. The problems started when a large numbers of borrowers failed to keep up on their repayments.

This ultimately meant that lenders did not get the kind of returns on their lending that they were expecting, and had to limit their future lending to protect themselves. As a result, businesses and individuals who were reliant on credit to get by found themselves in a difficult situation.

This explains who so many businesses have gone bust recently; it also explains why mortgages and loans are in relatively short supply.

What does the recession mean for me?
The recession is a worrying situation for many people - but equally, some people actually stand to benefit from it.

Mortgage holders

Many mortgage holders are concerned about negative equity - in which the homeowner owes more on their mortgage than their home is worth. This affects younger buyers most frequently, since they are less likely to have built up equity.

However, if you're in the last few years of your mortgage, and/or if you bought your home a long time ago, you should have built up a great deal of equity, and so negative equity should not affect you.

What's more, because the Bank of England has cut its base rate, lower interest rates could enable you to pay off the last part of your mortgage at a much faster rate than before.

Savers

While borrowers have benefited from falling interest rates, savers have suffered. In theory, banks need to offer savings rates that are lower than the current base rate to make a profit, and as such we are seeing a large number of savings accounts that offer very little interest.

That's not necessarily a cause for panic. If you are simply putting money away for a rainy day, or to pass on to your family, then saving money is still a good idea - it just won't grow in as quickly as it may have in recent years.

However, if you're relying on interest from savings to supplement your income, or if you're hoping for your savings to continue growing at a good rate, then you may find your returns are a lot smaller than in recent years.

Repaying debt

Over-60s are not often portrayed as likely debt sufferers, but the problem is more widespread than it may first appear. At the end of 2008, Scottish Widows found that the total debt on mortgages, loans and credit cards amongst pensioners totalled £72.3bn, a 28% rise on the previous year.

If you have debts to repay and are coming to the end of your career, then you face the prospect of delaying retirement. If you are already retired, the situation can be even more worrying.

To make matters worse, a survey carried out in January for Age Concern by the Institute for Fiscal Studies (IFS) suggested that inflation for the over-60s age group was 5.4% - ten times that of the overall population.

If you do find yourself struggling with debt, it's never too late to get help. A good debt advice company will discuss your situation in confidence and help to establish the best course of action to help you get out of debt.]]>