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How Do You Get Out Of Debt ?

Due to the current economic climate, more and more people are finding themselves in debt. So how do you go about becoming free from your debts? Well the first thing to remember is that you should not ignore them as they will usually spiral even more out of control. If your debts are not too bad then there are a number of things that you can do to try and pay these back as quickly as possible.

Be realistic
The first thing you need to do is sit down and work out the exact amount of the debts you have and who these creditors are. You should then see how much money you have coming in per month and work out a realistic budget of what you need to live on. It may be that you need to make some cut backs in order to repay your debts, so have a look at areas that this could be achieved.

Budgeting and making cutbacks
If you find yourself with more debt than you can comfortably repay then you may want to have a look at the amount you spend on your weekly shopping and bills and see if these can be reduced. It could be worth keeping a note of everything that you spend in a week and see if there are items that you do not really need that could be cut out.

It is important to remember not to continue borrowing and if need be, cut up any credit or store cards that you may have to resist temptation. You may find it easier to set yourself a weekly maximum so you know exactly how much you have each month and take this out in cash.

It could also be worth making sure that you are in the correct tax band and if you are eligible for any benefits. You may also like to check your utility bills and see if switching could provide you with savings.

Contacting your creditors
Once you have arranged your budget and made some cutbacks you should know how much you will be able to affordably repay to your creditors. You should then contact them and see if you can come to an informal arrangement regarding the amount you repay each month. It could be a good idea to send a copy of your budget so they are aware that the amount you offer is really all you can afford. Be aware that they do not have to accept your offer.

Consider consolidating your debts
For many people, consolidating their debts can really help make things more manageable. If you do decide to take this route then make sure you can afford it and that the interest rates will not be higher. In many cases the loan will need to be secured, usually on your house, so make sure that you understand the implications of this fully before committing. Other options available also include contacting a debt management company or entering into an Individual Voluntary Agreement (IVA) which is a formal way of dealing with your debts.