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Debt guide

With the Credit Crunch and looming recession, many people are being affected by the mortgage market meltdown, repossession/foreclosure, mounting bills and increased debt.
Debt has proved to not only be a financial burden, but a crisis which can affect all aspects of life from family and relationships to health and well being. Do not despair there are practical steps that you can take to reduce debt.

You first need to realise that Debt is not the problem but the symptom.
Many people hide their debts from friends and family or sometimes even themselves, by not opening statements or not totaling their liabilities. If that is you, then it is time to do something about it. You can only sort your debts out if you know the scale of them. It may feel better not to know, but in the real world it makes things worse. You can always seek help!

If Debt is affecting you or your family it is wise to open up about it, bottling up feelings can have harmful repercussions, sharing your fears and concerns with a neutral party can provide an open platform to alleviate stress.

The Online Counselling Service's top tips to avoid Debt during the Credit Crunch:

1. Learn to budget. One of the best ways to stay solvent in a credit crisis is learning to budget and controlling your spending. This is not as difficult as it sounds once you get the hang of it and with proper management, by cutting back on your spending and focusing on paying off debts, you will be in a much better financial position and this will help you stay on top of your finances.

2. Save by switching. Cut your energy bills by changing your service provider to a cheaper one and compare car, home and life insurance quotes for the best offer.

3. Set up an emergency fund. An emergency fund could easily mean the difference between losing your home in an economic crisis. Putting money aside regularly at least will give yourself a cushion should disaster strike. It does not matter how small the amount might be, every little bit counts in an emergency fund.

4. Pay off your debts. Bad debts should be paid off as quickly as possible. If you can’t completely pay them off, at the very least reduce them down to the point where they can easily be managed. As a bonus, you will be helping your credit score by reducing the amount of debt you are

5. Diversify. One of the best ways to stay economically stable in any time is to diversify. For example, if you are relying on one pay check for your entire income, it’s time to think about setting up alternative forms of income now.

6. Start downsizing. If you’ve got two cars and don’t need them both, consider selling one and the money made from the sale could be put into an emergency fund. By cutting back strategically, you’ll have enough money to keep current on your bills.

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