How To Get Out Of Debt





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Published on Dec 11, 2012

Knowing how to get out of debt is difficult. The pressure and stress of bills and demands for payment from creditors never seem to end and the balances on your credit cards never seem to get any lower.
To help you, we have devised an easy 4 step plan
Step 1 -- work out how much you owe and who you owe it to.
As obvious as this might sound, for some people the stress of dealing with creditors and the sheer volume of their debt means that sometimes they don't even know what they owe! Make a list of all your debts, including the creditor's name, the account number, and the amount outstanding. You may also want to list them in order of highest to lowest and make a note of any that are in arrears.
Step 2 -- prepare a simple budget.
Next, you need to document your earnings and expenditure. The best way to do this is to record your income and expenses directly from your bank statement and to keep receipts for any items you pay for with cash. This way you shouldn't accidently overlook any expenses. Some people may want to record their expenses daily but if not, we recommend doing it at least once a week.
Step 3 - prepare a repayment plan.
Having documented your income and expenses you should now know what is left over each week. The amount which is left over can be used to repay your debts. Be sure to split this amount up proportionately so that each creditor is getting an amount relative to the amount that is owed.
Step 4 --compare and review your plan every week
After having prepared your repayment plan you need to compare this plan against your actual expenditure. Sometimes the plan on paper is actually quite different to how it works out in real life. After several weeks you should be able to determine if the repayment plan is realistic and if not, you may need to adjust it slightly. Eventually though, you will need something that is affordable and you will need to follow it 100%. Unless you have a repayment plan and stick to it, you will never become debt free.
Another very important point to note is this: you need to stop using any credit cards. There is no point putting $100 on a credit card only to then buy $100 worth of groceries with it. If you are going to get rid of your debt you need to be able to pay more than the minimum amount off each month and not let the balance increase again.
If after creating your budget you realise that you do not have enough income to both pay your debts and your living expenses you may need to consider another solution. It is best to call us as we can do a free debt assessment for you and advise the most suitable solution for you. Call now on 1800 98


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