The New Year is an ‘obvious time for a financial review’. That’s the basic point of a new press release from Think Money, which advises people on a few steps they could take at the start of a New Year to help them make sure they stay in control of their debts.
As it points out: “many of us will be entering the New Year with a lasting souvenir of last year, in the form of credit card bills and other debts.”
Ideally, we’d all like to be debt-free this time next year. If that’s not really an option, we’d like to see the amount we owe shrinking, and the press release suggest a few ways people in different situations could go about achieving that – starting with a good review of their financial situation.
An ‘action plan’ that could work for people with spare money involves overpaying those debts: paying more every month than they actually have to. This can get borrowers out of debt more rapidly, and can seriously cut down on the amount of interest they’ll pay on the debt, because the interest just won’t have as long to accrue on it.
Then there are the people who might benefit from debt consolidation – people who are repaying multiple debts, which means they’re dealing with multiple lenders and making multiple monthly payments. Someone in that situation might find their finances are a lot more straightforward if they bring all those debts together into a single loan. In general, the quicker they repay that loan, the less they’ll pay in interest.
Then there are people who sit down to look at their finances and find that they’re likely to struggle with their debts in the year ahead. This can be a really difficult situation to be in, but a good way for people to start dealing with it is simply to talk to their lenders and find out how they’d advise them to go about it.