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Implications of finance - dealing with debt

Debt is part of modern life. It's difficult to live in our society without using debt and credit sometimes - mortgages and credit card bills are both examples of debts.

What if your income suddenly changes (because of redundancy, for example, or a relationship breakdown), it's easy to get behind with payments.

Some of these are more urgent than others – if you get seriously behind with your rent or mortgage, you may lose your home. If you don’t pay your fuel bills, your supply could be cut off. If you default on a credit card bill or an unsecured loan, your debt will increase, and you could eventually get taken to court. To find out more about why debts grow, have a look at our section on interest.

To reduce your debts, you need to start planning and budgeting. If you know exactly how much money you have coming in, and what you need to spend, you can identify how much will be left to pay off debts.

Getting into the habit of budgeting is well worth the effort - it will help you pay off your current debts, and mean you're less likely to get into problems in the future.

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