Tips And Strategies For Getting Out Of Debt

Tips And Strategies For Getting Out Of Debt
Photo by Fox Wu – CC BY 2.0

Getting out of debt should be the sole focus on anyone who is in that situation. Getting into debt is nothing to be ashamed of, many people end up owing money to creditors through no fault of their own. They may have managed their finances perfectly satisfactorily for years, but often it only takes one upset, such as illness or losing a job, to start the spiral of debt.

Debt can easily spiral out of control, so the most important thing anyone with payment arrears can do is seek advice and put together a financial plan. Although the situation may seem bleak at first, there are many things that can be done to lessen the burden of owing money.

Start by stopping any unnecessary spending. Drop anything that is not needed, for example magazine subscriptions or evenings out. Make grocery money go further by buying value brands where possible and checking the reduced shelves for bargains. Going without luxuries on a short term basis will mean reducing debt faster. Clip coupons and make use of money saving offers. A lot of small savings can add up to quite a large amount.

Talk to creditors as soon as possible. Often if they are informed at an early stage they are more inclined to be lenient and may be able to arrange for a short term suspension of payments. Talk to debt experts who can advise on money management plans and future budgeting, and once a budget has been set, make sure it is adhered to. Going over budget, even by a small amount each week, will only delay the process of becoming debt free.

In general taking out a loan to cover debts is not a good idea, however a specific debt consolidation loan could be a viable option. A debt consolidation loan is used to pay off outstanding debts, and leaves an individual with one monthly repayment to meet rather than several. This course of action has other advantages in addition to a single monthly repayment, for example the loan will be for a fixed period of time.

Where possible prioritize debts in order of importance. Those that have the highest interest rates are the ones to focus on paying off first. If possible arrange to delay payment on some debts in order to be able to clear the most expensive ones in a shorter space of time.

Make a list of every item of income and expenditure. Shop around for cheaper deals on things like insurance, this can be especially effective for people who have been with the same insurer for several years as there are often significant savings to be made.

Getting out of debt will not happen overnight. It may take months or years for someone to fully pay off everything they owe and get themselves back on a sound financial footing. There is one thing that is certain though, facing up to debt and taking responsibility for how money is spent within a household or business, is the first step of the road to financial recovery.

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