How to Get Out of Debt
When it comes to trying to get out of debt, there are a few areas that you can look into. Not all of these will be something that you can realistically do but they are definitely worth thinking about rather than filing for bankruptcy and risk losing everything.
To get out of debt, the first thing that you will need to do is sit down and work out where you are spending money. Setting a personal budget will help you to clear your debts and then be on your way to saving money. This can take some time to do and if you have a partner, you will both need to sit down together.
If you find that you do not have enough money to pay off the debts, you will need to look at cutting the money that you do spend each month. This could mean not buying new clothes for a few months or cutting down on the amount that you eat out. You may even want to look for ways to be able to increase your income, which could involve online revenue programs or earning money from a hobby.
One way of cutting down on the amount of money that is going out is by looking carefully at what you spend money on. If you have two cars, you should consider whether you need them both. Running a car can be extremely expensive, especially when you add on the insurance for the two of them. You could find yourself making hundreds in savings.
Increasing your income is not just about finding extra ways to earn money; you may be entitled to tax credits that you are not claiming. Check for all of the credits that are available and see if you qualify for any of them. It may be only a few hundred each year but that is definitely better than nothing.
Another way to get out of debt is to make an informal agreement with your creditors. This will involve calling them and explaining your current situation. You may be able to lower your monthly repayments or freeze the interest that is added onto your debt so that you can pay it off. The problem with this is that the lenders do not need to agree to these and they can choose to cancel it at any point in time. If they do agree, you will need to keep them up to date with your financial situation and you may find that you have to increase the payments if you find that you are getting more money coming in.
A final option to get out of debt is through a debt management company. They will usually deal with your non-priority debts but it can cost you money to go to them and you will need to decide whether they are worth it; you should keep an eye out for the free companies. They will negotiate the debts on your behalf and you will pay them one monthly repayment, very similar to a debt consolidation loan.