Liabilities Review
What type of debt do you
have?
You need to understand the
nature of your debt. By this I mean that some of your debt
might be deemed long term – like the mortgage on your home,
often paid off over twenty to thirty years or so; some might be
medium term – such as loans on replacement windows, a car or a
caravan which you generally clear in two to five years; and
other debt might be short term – like a bank overdraft, credit
cards and store cards and these should normally be paid off
well within a couple of years. It is often the short term debt
– especially credit and store card debt - that causes the most
debt problems.
- Are you in arrears on any of your domestic bills? Give
priority to paying those bills that keep a roof over your
head - mortgage, rent, utilities, council tax - and those
that are the result of any court order.
- Are you in arrears on any of your borrowing? Priority
should be given to paying these.
- Are you 'maxed out' on any of your store or credit
cards? Check out the section on get out of debt plans for
credit and store
cards.
- Have you taken out extra borrowing to enable payments
on existing loan agreements?
- Are you paying 'over the odds' for your credit
arrangements?
- How long will it take you to pay off what you owe at
your current rate of repayment?
- If interest rates were to rise, could you afford
the increased loan repayments?
- For your personal loans, calculate the total amounts
repayable over the term of each loan
- Draw up a list of all your credit and store card debts
with the most expensive, in terms of the interest rate, at
the top. Then the next most expensive and down the list to
the cheapest (perhaps not the most appropriate word in
respect of credit card interest rates, but I'm sure you get
my drift!)
Income Review
Assets Review
Expenses Review
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