5 Tips: How To Get Out Of Debt

Did you know that by December 2016, people living in the UK had a sum total of £1.516 trillion in debts? This was up from the £1.466 trillion recorded at the end of the year 2015. This also means that, on average, individual debt grew by £995.53 per adult in the UK. Shocking! Right?

Well, this is attributed to the fact that getting into debt is way easier than getting out of it. Getting yourself into debt can be a result of many factors, like unemployment, huge financial emergencies, failed investments, or sometimes, misuse of funds. Whatever the case, no one ever enjoys being in debt.

 

That’s why you’ll find most people looking for answers to the question on How to get out of debt? Well, is it an easy process?
Absolutely, No! But, is it possible? Absolutely, Yes! Despite it being an uphill battle, you can push your way out of debt, but only if you arm yourself with the right tools, debt management plans and IVAs. An IVA stands for Individual Voluntary Arrangement and it is a legal agreement between you and your creditors that stipulates that you’ll repay your debts at an affordable amount and rate. Debt management plans are usually broader that IVAs because they encompass a number of debt repayment strategies like taking a debt
consolidation loan.

On your search for the perfect solution to your debt problems, you are bound to come across a lot of expert advice on how to get out
of debt? Sadly, debt is usually personal for every individual which means that solutions that worked for a friend may not necessarily work for you. But on the bright side, there are always a few common denominators that people in debt and those who escaped its grip share. That’s why to effectively get out of debt; you need to learn from those who’ve been where you are. Comparing two or more
stories will always give you a stable course of action on how to become debt free and to pay off all your remaining balances. In the process, you’ll learn that these commonalities are ordinarily basic financial solutions that can be used by anyone in debt. Below are 5 steps to take for you to get out of debt as soon as possible

Start by Prioritising Your Debts

The first step towards financial freedom starts with you reorganising yourself. In most cases, people say they are in debt because they
don’t have money. But in the real sense, most of these people usually exhibit one common failure – they don’t lack funds to repay their debts, the lack the organisational skills needed to repay debts. For you to successfully repay all your debts, you need to be organised enough tackle your situation. This involves knowing exactly how much you owe your creditors, how many creditors you owe money, and also (on a scale of 1 to 10,) how critical is the debt to your day to day survival. Remember that it is always unwise to go to war with
an enemy you know very little about, that’s the same case with debt repayment. You need to know every tiny bit of information about all your debts for you to strategise on how you are going to repay them. Once you have a list of all your debts, you’ll be able to prioritise on the ones that need to be paid first like food, mortgage, utility bills, and so on.

Start Living on a Budget

After you have prioritised your debts and determined how much you owe, you should proceed to assess your financial situation. This means looking at how much money you are making as well as how much money you are spending. If you find out that you are spending more than what you are earning, then you seriously need to reevaluate your lifestyle. Taking your income and expenditure into consideration will help you figure out how to squeeze your expenditure to ensure that you survive while at the same time saving enough to repay your debts. Remember that creating a budget is not full-proof unless you stick to it strictly.

Try to Increase Your Income

This may be easier said than done, but it’s always worth the try. If you realise that your income does not meet your expenditure even after
creating a minimal budget, then getting ways to earn more income would be the best way forward. You will have to either ask for a raise, look for a second job or a secondary source of income to help you pay off your debt. It doesn’t have to be hard and tiresome since you can decide to capitalise on your skills and talents to make more income. In fact, you might actually end up enjoying it.

Consolidate Your Debts

Debts consolidation has been there for a while now and many people have used it to get out of debts. After you have prioritised your debts and restructured your expenditure, it would be advisable to consolidate them all into one compact debt that’s easy to repay and manage. All you have to do is to find the best agency to help you with the consolidation process. Since many agencies offer debt consolidation services, it’s always good to do some prior background checks to ensure that you get into an agreement with a services provider whose more bent towards helping you to repay your debts rather than making profits. Debt consolidation is always suitable because it comes with better and leaner terms of repayment. For instance, a debt consolidation loan can come with a reduced repayment interest rate and a longer repayment period.

Lastly, Focus On Repaying Your Debts

While it may seem hard, disappointing and tiresome to work and live for your debts, the reward is usually greatly relieving. For a smoother process, you can use the snowballing method which involves having minimum expenditure to divert large chunks of your income towards debt repayment until it is fully paid off. Remember that you can also use IVAs to renegotiate your monthly payments to something you can afford to pay. If you follow these steps then you’ll be debt free in a very short time.