Simple Ways to get out of Debt

Making the decision to get out of debt can turn life around for the better. Getting out of debt has never been more important than in the post recession climate where interest rates, living expenses and availability and security of jobs are factors which are unstable and unpredictable. Getting out of debt doesn’t have to be complicated, by following these simple ways to get out of debt you can take this life changing step today.

Step one; adjust your attitude. For many people debt doesn’t seem like a bad thing until the red letters are arriving in the post, huge missed payment charges are being applied to a balance and the situation is rapidly spiralling out of control.

You must realise that living on credit is no way to live. Essentially in order to have money to spend today you are destroying the financial stability of your whole future. You will never have enough money for all the things you need or want when you’re paying interest on a borrowed sum.

Another important aspect of this initial step is to avoid panicking and getting too scared to face the situation head on. Getting out of debt is just a case of lowering expenditure, raising funds and making payments. It’s not an overnight process but it’s also within reach of anyone willing to embrace some changes. A positive, can do attitude when working your way out of debt will set you up for success. Rather than be scared you must be proactive, when something is wrong you need to take action and then your situation will improve. Panicking will not advance you towards your goal.

Step two; balance your figures. Get all your financial information on income, expenditure and debt defined in either a spreadsheet package or a very well organized written system. Do not neglect irregular expenses and cash purchases. Go back through bank statements and keep a weekly cash diary to help you with this.

Go through all of your expenses and strip them down as far as you can get them. Eliminate anything that you can do without such as dining out, alcohol, luxury groceries, TV channel and other subscriptions. Reduce necessary expenses such as rent, bills or travel costs by downsizing, renegotiating and considering new options. You can get your spouse, family members or friends to help with this as more minds equal more ideas.

Grocery shopping is a big, regular expense for most people which can be tackled by establishing a modest budget and scouring the stores for the best money stretching deals.

Some of these changes will become things you can live with permanently but you might have a few items that you reintroduce later when your debts have been paid. If there are any items which you are unhappy about relinquishing then remind yourself that it’s not forever.

If you smoke or drink it will become apparent that stopping both while you are paying back debt will speed your progress up by a large margin. Giving up these things may not be easy but you must exert strong self will in order for your life to change. Even if you just cut down you are doing favours for your debt repayment and your health.

Step three; initiate a strong decision making process when buying. Don’t throw your life away for bad habits. Impulse buying is a habit. Whenever you want to buy something you should ask yourself if you really need it. Is it worth the money? Do you have enough money in your budget to get the item? Think about how many hours you would need to work in order to afford the item, is it still as appealing?

Reassessing items in this way can lead to many improvements. For example if you regularly purchase coffee or lunch when you’re out and about then you are paying a vast premium for convenience which you can ill afford when repaying debt. Convenience is all very well when you are flush but it’s not worth being in debt for and this realisation will make home made sandwiches and a thermos look much more appealing.

Scaled down expenses are just one side of the equation, you must also boost income. This can be done with overtime, a second job, freelancing, can collecting or a multitude of other activities.

Step four; boost your efforts.

As you start to make progress with repayments you will no doubt work out how long it will take you to be out of the red. At this point the prospect of extra effort is not daunting but exciting. It can be seen clearly that raising a lump sum of a few hundred would mean an extra big payment being made or that squashing the weekly budget by ten per cent will get you to the debt free goal a few weeks earlier.

Activities such as garage sales or selling possessions on eBay can raise money. Consider every skill and opportunity that you have from cooking and sewing to private tutoring and dog walking.

Step five; be careful. Play it safe when it comes to finances. Establish a financial cushion in your current account and create a savings account if you do not already have one. Even if you can only afford a miniscule amount this is significantly better than having nothing at all.

Unexpected expenses should be expected. There are always a few bills every month which are unexpected or turn out larger than was anticipated. Make sure you always send your repayments in early and that you have enough funds to cover the payment made. Avoid structuring your finances so that you will be facing charges every time you make a mistake or something does not go to plan.

These steps are the simple strokes of getting out of debt. The principle is easy; reduce expenses, boost income and make your payments. If you have a large sum of debt to pay off the process may be a long one but once the journey is completed you can use your new financial savvy to make sure that you never get into debt again.