How To Get Out Of Debts
- Gina V
Do you feel like your credit card is insurmountable and you can’t pay off your debts? The good news is that no matter how high a mountain appears you can climb it and pull yourself out of the metaphorical hole you may find yourself in.
Here are some ways to tackle and bring it down to size your debts
You can either create a debt management plan when you make an agreement between you and your creditors to make small amounts of payments every month or you can have a debt consolidation loan when you move all your debts to one lender and make simple monthly payments.
Work out how much you owe
Before you think how to get out of debt, you must know how much you owe. For this you need the bank statements for the last couple of months, piece of paper and pen.
- Write down on paper all the bills, credit cards, loans, mortgage, overdraft. Write down how much you pay monthly for each of this.
- Do a household budget which will help you where your money is going. If you don’t know how to write your budget, you can find a template here.
Only buy what you can afford
The best way to keep debt from becoming a problem all together from this point forward. Instead of planning on a fancy piece of electronic hardware just wait and save up for it.
- Staying within budget and paying off your bills every month means that you don’t need to worry about that piling up on top of you
- You can still get out of relief of being Debt Free by changing your mindset from “having it now” to one of enjoying it even more when you have the money.
Check your daily spending
Write a shopping list and make sure you buy only what you need. It’s a good idea to take cash with you and leave the card at home. This way you are aware that you can’t spend more than you afford.
Check your old standing orders
When I last checked my standing orders I noticed a gym membership that I can’t remember when I last used it. So, it’s a good idea to check your standing orders just in case you are paying for something that you are not using anymore. That money can go to your debts.
Set up direct debits for your debts
It’s much easier to manage your debts if you are using direct debits. And it is very easy to set up- just call your bank and provide them with all the details of your bills. I have all my direct debits set up to be paid next day after I receive my salary. This way I know exactly how much money I can spend for the rest of the month. And because I am trying to save every month, I have set up a direct debit for a saving account. Even if it’s only £20 per month, it is still something and at the end of the year you can pay more on your debt or you can enjoy a nice present from yourself. At the end of the day you worked hard to get yourself out of debt.
Pay off your lowest balance first
Financial advisers often advise people in depth to take care of the highest interest debit depth first. In general this is a good way to go however, if you have a credit card with a balance of only couple of hundreds it would also be beneficial to that one-off right out of the day
- You can eliminate a whole payment, save on interest charges and put that money towards other bills.
- Plus, think how happy you will be after you eliminate the whole payment.
If you still struggle with your debts, you can always ask for professional advice here.
If you don’t know how to start savings and pay off your debts, follow the 14 Steps Of Saving Made Simple.