Budgeting is key to repaying debts

The key to repaying debts, including those from payday loans and credit cards, is to produce a realistic and sustainable budget.

Liz Dunscombe, director of project and partnership development at Credit Action, said that the budget needs to take everything into account so that people are able to see what they are spending and cut down in certain areas.

She added that the cost of all priority bills [such as] rent/mortgage, council tax, utilities, [as well as] essential food, clothing and travel expenses all need to be included in the budget.

"If consumers are unable to create a budget that balances due to debt repayments then they should contact a source of free, independent money advice, such as the Consumer Credit Counselling Service or their local Citizens Advice Bureau," Ms Dunscombe suggested.

However, Legal & General recently revealed that people are turning to their savings in order to cover day-to-day costs.

Moneyextra.com recommends you take independent financial advice before acting on any article

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2011-10-10 17:02:33 © Moneyextra.com