If you have got yourself into a situation where you owe a great deal of money to a variety of different lenders, it’s now time to start sorting yourself out. Getting out of debt is important, not just for your peace of mind but also to improve your credit score. Here we are going to look at ways you can use to get yourself out of debt and back into a stress-free way of living:
- Work out how much you are spending on stuff you really don’t need. Look over your credit card statements and bills and see where you can make some cutbacks. Stop buying things you don’t need and put a bit extra towards paying off your debts.
- Do away with credit cards and loans. If you have card balances to pay, get them paid off as quickly as possible and don’t take the cards when you go shopping. Take enough cash for what you absolutely need to buy. If you find that you can’t leave your credit cards alone, get in touch with the card company and ask them to cancel it. Open savings accounts and put your spare cash away for emergencies. This will eliminate the need for borrowing at high interest rates when the unexpected happens.
- Contact your creditors and come up with an affordable repayment plan. If you can, consolidate all of your debt into one loan so you only have to make one payment each month. Only do this through a reputable lending institution though, there are a lot of sharks out there who will put you further into debt.
- Get balancing. Make sure your budget equals what you earn and that your payments can be paid on time every month. Make sure you budget enough for necessary expenses such as rent or mortgage and utility bills. If you find you cannot keep your payment schedule, get in touch with your creditors immediately – they will be more understanding. If you can’t do it, contact a reputable debt counselor to help you.
Once you have cleared all of your debt and got yourself back on the straight and narrow, you will need to rebuild your credit history up again. Don’t fall back into the old ways of having loans and cards you don’t need. Have one or two credit cards that are used purely for essential or emergency items and pay them off in full as quickly as possible. Keep an account of your income and expenditure. Write down exactly what you are sending money on so you can see if you need to cut back anywhere. If you take out credit cards with a reward system, make sure that you will actually get some use out of the rewards. If possible, apply for a prepaid credit card. That way, you can’t spend what you haven’t got and it works in your favor by increasing your credit score.
Don’t let your debt take over your life. As soon as there is a problem, deal with it before it gets out of hand.