Getting Out of Debt in 5 Simple Steps

Getting Out of Debt in 5 Simple Steps
Even before the pandemic, 8.3 million people in the UK were in debt. Since this event, the amount has grown considerably. When you find yourself in this situation, how do you get out of debt?  One way is with organization and a solid plan. Read on as we discuss getting out of debt in 5 simple steps.

1) Know-How Much You Owe

How to overcome debt starts and ends with knowing how much you owe. It can be tempting and seem better for your mental health to ignore the problem, particularly if the debt is a large one. However, without knowing the scale of the problem you can not make a solid repayment strategy. 

2) Get Detailed

Now you know your amount, having a solid plan is the next step in overcoming debt. If you know the details, you can begin to save money and make sure you don’t get added fees and charges. 

For each debt, write down the payment due date, minimum payment, and interest rate. You can then plan a monthly calendar, making sure everything is paid on time. 

3) Snowball

The snowball method is one of the most effective tips for getting out of debt. It involves starting with one of the smallest debts you have. You put all your effort into paying this off, only providing minimum payments on other debts. 

Once it is paid, the money you are saving and the money you would have been paying off before goes on paying the next most urgent debt. Once paid, you carry on, creating a snowball method. As you pay off debts, you get more money to pay off the next one. 

4) Curb Your Spending

Once you know how much debt you have and a method to get out of it, you need to start increasing your available funds. For many people, this can come from curbing your spending. 

Go through all of your monthly necessities and see how you can cut back. This can be done in many areas such as grocery bills, utilities or fuel. Work out how much you will save, and make sure it goes towards paying off debt. 

Your next step should be to stop spending on unnecessary items. This will involve sheer willpower. Make sure you do not buy any luxury or goods for entertainment until the debt is paid off. 

5) Refinance

Refinancing involves swapping a debt to one with a lower interest rate. This can help you pay off debt faster and save you hundreds of pounds in interest fees. You can refinance everything from mortgages to personal loans. 

Credit cards can be transferred to a balance transfer card. You could also seek debt consolidation loans that put all your debt into one payable amount. Experts such as becomedebtfree.co.uk can help with advice on this. 

Getting Out of Debt

Now you have a guide to getting out of debt, prepare to instigate it. Set up your plan, and aim to begin on the next payday. This way, you can tackle the problem head-on. 

If you enjoyed this article we have many more to help. From debt to investment, we can help manage your money in the coming year.