Can i really get out of debt? i need help to get back on my feet

There’s always a way out of debt, however complex or difficult your situation might be there is always a way out. If you’ve come to a point in your life where you no longer want to waste time worrying about debt and tackle the problem head on then this guide just might help you.

Before I start dishing out advice I want to remark that I was in a very similar perilous situation when it came to debt, I spent more than I earned for a very long time when credit was readily available, eventually my position became untenable and I had to do something about it, I had sleepless nights, I was even scared of answer the door or phone in fear of bailiffs coming around to repossess items.

Learn More about the Enemy

I considered debt to be my enemy and I spent a lot of time on personal finance blogs like The Simple Dollar and Man Vs Debt to find answers, I also spend a tonne of time reading personal finance books to get my finances in order. Three years later I am credit card and loan debt free, I do have a mortgage which I am now working towards to pay off the balance.

I learnt so much from these blogs and books and wanted to share as much information as possible, you can get out of debt and you can look forward to a brighter life. After reading all the blogs and books on personal finance I have boiled down the four principals that have really helped me to eliminate my debt, if you can apply these principals then there is a strong chance that you can get rid of your debt quickly.

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#1 Stop Taking Out More Debt

There came a point in my life when I was taking out debt to service debt, I was compounding my problems and making them bigger so I could handle them later. I eventually ran out of credit and this is when credit card companies and loan lenders started harassing me, for a while I buried my head into the sand but I knew deep down I had to deal with my problems.

The first step I took was to cut up my credit cards and then put them into a container full of water and freeze them, this would serve as a constant reminder of my debt, this also stopped me to spend more and stopped the problem from getting any bigger.

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#2 Talk to Your Lender

I knew that I wanted to confront my lender and discuss my problems, to be honest I was scared, I wouldn’t like it much if someone I lent money to was unable to pay me back, I would be very annoyed. Eventually I bit the bullet and made a list of all my debt, all the interest applicable and the minimum payments.

I would definitely suggest you do this on an excel spreadsheet so that you can quantify your problems and then tackle them head on, try to print out this list and leave on your freezer, on your TV, frame it on the wall! Having a constant reminder helps so that you can strive to pay the money off quickly.

My plan was to speak to all my lenders and ask for a rate cut or interest to be removes, I also asked for a reduction in minimum pay, I explained to them that I was experiencing difficulty making payments and rather than declaring bankruptcy I wanted to pay back the money but I needed help.

To my surprise a lot of the lenders were very sympathetic, most of them reduced the interest to zero while others slashed the rate or lowered the minimum payments. This was a real turning point, this slowed down the rate at which the debt was growing which meant I could pay the balances off quicker.

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#3 Completely Slash Your Budget

I was even more determined to pay off my debt when I was able to reduce the interest rate, I did know how long this discount would last for so it was in my interest to pay off the debt as quickly as possible. My next step was to really analyze my spending and earnings; I grabbed the last 6 months bank statement and then listed all the income and outgoings for every month to see what I was spending money on.

I was just about breaking even. I wanted to create at least £500 surplus income and went about on a cost cutting spree, the mobile went, the car went, the magazine subscriptions went, I cut my spending on clothes, food, and luxuries; I even walked to work.

What I learned was it is possible to slash your expenses if you put your mind to it, if you really want to be debt free then you have to make really tough choices, I loved my car but I knew that sorting my debt problems now would give me a better chance of having a better car in the future, I was paying the price for the past with the present but also laying a good foundation for the future.

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#4 Use a Debt Snowball Strategy

Having a good chunk of surplus income helps you sleep better at night, I was now in a great position to pay off my debt but I need an effective way to make the payments. It’s at times like these when personal finance blogs can really offer direction; the Simple Dollar recommended a strategy that Dave Ramsey was preaching about in the Total Money Makeover.

The strategy involved listing all your debt in order of size and disregarding the interest on it, you then make minimum payments on all the debt and then throw all of your surplus income to pay off the smallest one first, once you’ve paid off the smallest one your surplus income rises, you should then tackle the next biggest debt.

This strategy is not the most efficient however it was very effective for me, it kept me continually motivated as I was making progress, this progress spurred me on to pay the debt off even quicker by selling items in my house and even finding ways to increase my income to make more payments.