Five steps to get out of debt

Get out of debt

With the maximum fee chargeable by an English university standing at £9,000 in 2014, and full-time students having to start repaying their student loan in the April after they graduate if they’re earning above £21,000, student and graduate debt is as hot a topic as ever.

Anyone who has been in debt will know how stressful it can be, especially if your debtors are on your case. And those who have managed to overcome their debt problems will testify that it clears your mind – you feel free! As soon as you tackle your debts you can sleep in peace, feel more relaxed and generally feel happier. Here are five steps to getting out of debt, or at least to help you get closer to being debt-free:

1. Understanding the reasons why

If you don’t understand why you’re in debt, you’ll never know where to start from. A student loan, for example, is an excellent investment in your future, but getting a loan just to fund a lavish lifestyle should obviously be avoided at all costs. Once you know why you’re getting in to debt, you will be able to make effective plans to tackle it.

2. What are my sources of income and what are my outgoings?

To make improvements, you first need to know where you currently are with your finances. Write out a list of all your streams of income against all your outgoings and it will show you how much money you have left pay off any debts each month, or what you may need to cut down on to start saving money. For example, if you have a mobile contract that’s £40 a month, perhaps that could be cut down to £20 or less by changing your deal (especially if you have thousands of minutes and texts left over each month). This could give you a saving of £240 a year – and that’s £240 that could be used to pay off your debts.

3. Winning the battle of the mind against the heart

Getting carried away when you decide to ‘nip to the shops’ is easily done, especially when the sales are on. The temptation to buy ‘bargains’, especially when you don’t really need them, will always exist, but you need to learn how to categorise your purchases as ‘needs’ or ‘wants’ and shop accordingly. Remember that a bargain is only a bargain if you actually need it –  it’s surely better to have £30 in your pocket than an unworn cardie hanging in your wardrobe!

4. Free advice support

There are different types of support available for anyone in debt or finding it hard to manage their money. Help is always at hand, so don’t be afraid to ask, as there are a number of organisations that offer free and impartial money advice that can help you with your finances.

5. You are what you think

If you find yourself in debt, self-belief is vital if you’re looking to get out of your situation any time soon. Self-confidence will give you the will power to keep on going when you feel like giving up. Always remember that winners never quit, and quitters never win!

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