Five steps to stop your debts spiralling out of control

Last updated: Aug 24th, 2011
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Cut Your Debts  |  2 Comments -
Follow our five-step guide on how to avoid succumbing to a mountain of debt.

There are five essential steps you need to take if you want to get your debt problem under control.

1. Identify just how much debt you have.

This means opening all the post, calling any companies you owe money to, and finding out just how bad everything has got.

2. Draw up a budget.

Unless you are certain of everything you have coming in, and everything going out, there's no way you can get a handle on what you are spending.

3. Work on your budget

Try to improve your income and reduce spending. At the very least you need to bring this back to a situation where you are spending no more than is coming in.

4. Contact your creditors

Contact everyone you owe money to, and ask if they will accept the reduced payments you can afford.

5. Stick with it.

It may be tempting to go back to your old ways, but the rewards of keeping debts under control is a retirement where you get to think about something other than money.

Where to seek advice

Comments
DavidS:

Budgeting is probably the most important aspect of cutting back on debt. Most lenders have an online system where you can see how much you own and bank statements can be checked to see the repayments each month. If someone is really serious about cutting back on debt then they also have to be serious about cutting back on expenditure. Sometimes the little things add up, like making your own lunch each day. It is about finding all the places that savings can be made each and every day. 

Thu, 15/04/2010 - 13:06
mikebenson:

It is so important to work backwards when trying to control debt. If you can visualize where you want to be say in 6 months or a year and then work backwards. Stating if I want to be their in 6 months then what do I need to do today to make those goals. Soon enough you will find ways to save.

Thu, 15/04/2010 - 13:36