If, like me, you are in a mountain of debt and feel like the world is a cruel place for getting you into this much debt, then perhaps it is time to accept reality and start taking responsibility over your finances. Nowadays, there are more people in debt than there have been in the last twenty years, with many of this group of people aged between 20 and 35 years. There are many opportunities and help available to assist you out to get out of debt such as debt consolidation loans, budget planning and useful advice from finance forums.
However, I have discovered five easy steps into getting yourself to begin working your way out of debt. The first step is exactly as I have mentioned above and that is to take responsibility. Accepting you have debt problems can often be a difficult point to admit to, but this is the most important part of moving ahead and taking control of your finances.
The second step is to calculate exactly how much you are in debt by. If like many people, you have credit card, store card and bank loans, then perhaps debt consolidation maybe the best option for you. It is more difficult to get out of debt if you have more than one debt to pay off, as you are paying a large chunk of this on interest alone.
Debt consolidation will enable you to control where your money is going and pay less towards interest. This will give you peace of mind, when you have only one payment coming out of your account and you will not be so out of pocket at the end of each month. This will only work if you are willing to control your spending and avoid getting yourself into further debt by taking on more credit.
The third step is reducing your monthly outgoings. Work out how much you are spending, including debt repayment and see where you can afford to make the cuts. I remember having to make a note of what I was spending on and listing all my outgoings. I was most surprised to find that a large amount of my money were spent on my lunch breaks! I was amazed at how much I was spending on buying lunch. Therefore, I opted to make my own lunch, which saved me at least a couple of thousands of pounds each year.
If you have a contract mobile phone, try changing this to a pay as you go and work on spending a certain amount each month. Ask yourself, do you really need to spend hours talking on the phone to your friend, when you can easily text or chat to them online the internet. Try reducing your monthly outgoings by one hundred pounds; you will need to take time on working this out but it is worth your time and effort.
The fourth step is to be sensible with which debt you are paying off. Work out which debt is costing you more in terms of interest payments and begin whittling this down by upping the payment towards it. If this is not possible, then as above, try to bring the least expensive debts into one payment, which will help reduce the overall costs. However, if you have spare cash, do not spend this on a holiday or unnecessary accessories but put it towards your debt, as you want to be debt free as quickly as possible.
The fifth step is to increase your income. This may seem impossible or beyond your own ability, however, this is possible for most people and well worth looking into. I took up a part-time job in the evening, and found the extra income was a great help in reducing my debts. One thing that I did make time for was relaxation, so always allow some time for you to unwind. The extra income could amount to approximately two thousand pounds a year before tax, so this is well worth the effort.
