Member Article

Five ways to get yourself out of debt

When you have any form of debt, you might be under a lot of pressure to better your financial situation. Although some forms of debt cannot be avoided (such as student debt) certain types of debt shouldn’t have happened in the first place. It doesn’t matter why you are in debt because when you implement cost-saving steps, you will soon owe a lower figure or none at all. Here are some of the many ways which, when followed, can better your finances.

1) Make a budget

It is very important that you create a budget. Working out your income, you should also calculate how big your mountain of debt is. Taking into consideration all expenditures which have to be paid such as utility bills and mortgage repayments, you will know how much spare capital you have that can be used for repaying your debts.

2) Combine your debts together

If you owe money to several creditors, you will probably worry about how you can repay them. When your total debt level is calculated, you can concentrate on paying off a solitary figure and not several debts. Although your debts will still be apparent, you can remain focused on paying off a single figure and not many.

3) Get rid of your credit cards

If you have many credit cards and each charge a very high interest rate, do you actually need them? Although credit cards are convenient when you want to pay for something when you are out shopping and you don’t have enough cash in your pockets, a debit card could be used for the exact same purpose. The reason why you have a credit card should be reconsidered. If you already own a home or you won’t be applying for a mortgage, why do you actually need a credit card at all?

If you want to continue owning a credit card, you could choose one which charges a lower rate of interest. If the credit cards which you own at the moment each charge a 20% interest rate, you can cancel them and apply for one which charges a much lower rate of interest.

4) Pay your bills at once

Although your mortgage repayments or rent have to be paid on a particular day, utility companies do provide you with the opportunity to pay bills when you like. When you pay all of your bills within days of each other, you will know when there should be sufficient funds in your bank account. If your bills have to be paid throughout the month, it can be difficult to manage your finances. However, when all of your bills are paid off within a few days, you can manage your finances more effectively.

5) Don’t add to your debt

You shouldn’t bury your head in the sand and believe that only through spending will your debt levels decrease. Although it does seem straightforward to borrow further money in order to repay your debts, you will still have to pay off the latest loan you’ve chosen. Even if you only spent a hundred pounds on a gadget, this is still money which you will have to pay back to one of your creditors – it could also have been used to repay a loan. Reducing the amount of money which you spend to an absolute zero will not only help you to manage your finances but it will also mean that your debt levels won’t increase either.

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This was posted in Bdaily's Members' News section by Tom Brown .