Getting Out Of Debt – A "How To Guide"

Getting out of debt – a ‘how-to’ guide

More and more people I know are falling into debt. Some of them have been able to clear their debts and get on with their lives, while others have struggled to repay what they owe and are still finding it difficult to get on top of their finances.

So, from my own experience, and from watching how my friends have done it, I have decided to put together this short guide about how you can get out of debt.

This three-point guide isn’t guaranteed to get you out of debt, but it should certainly help improve your financial situation.

Create a realistic budget

The first thing you should aim to do is create a realistic budget. I must stress the word ‘realistic’ here – because if your budget isn’t realistic, you will find that you won’t have enough money to cover the cost of your expenses.

I’ll give you an example here… my friend created her budget by writing down absolutely everything she earns and spends each month. She then subtracted the amount she spends from the amount she earns – this left her with the amount of money she has ‘spare’ each month.

This money can be used for anything – eating out, CDs, entertainment, etc. – but my friend chose to put it towards her debts and ‘overpaid’ her monthly debt repayments – which allowed her to become debt free sooner.

Consider your options

It is crucial when you are dealing with your debts that you know what your options are. My friends who are still in debt have only recently become aware of what help is available to them, whereas a couple who have already cleared their debts made a point of finding out about the help available – and went and got it.

An example of the help available (that I personally looked into when I was in debt) is an …

IVA (Individual Voluntary Arrangement)

An IVA (Individual Voluntary Arrangement) is a formal agreement, and allows people to repay their debts over a period of 5 years. It is only an option for people who can’t afford to repay their debts within a ‘realistic’ amount of time but who can afford to make regular monthly payments.

I didn’t enter an IVA, but I certainly gave it a good look. The reason I didn’t enter is because I could actually afford to repay my debts, but it would just take a while!

So, the point here is to know your options – in other words, do some research. After all, there is so much help available out there, so you should be able to find something to help you get out of debt.

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Comments

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