Easy Ways to Get Out of Debt

Short of winning the National Lottery or stumbling into an unexpected inheritance, there is no easy way to get out of debt. Even with a large windfall at their disposal, many consumers choose to continue spending rather than paying off their current creditors. For the average consumer with overwhelming debt, restoring financial control requires careful budgeting, reducing impulsive spending and building a savings fund to cope with emergencies. A practical debt management plan arranged by a qualified debt manager may also help you to get out of debt.

Finding the Easiest Debt Solution

All debt management solutions require effort on the part of the consumer in order to succeed. Whether you choose a debt repayment plan through a debt management company, an Individual Voluntary Arrangement, a debt consolidation loan, a full and final settlement or bankruptcy, resolving your financial troubles will require certain sacrifices. Even if you choose bankruptcy and all of your debts are discharged, you may be unable to take out a loan or obtain credit for a period of time.

Under any circumstances, getting out of debt requires major lifestyle modifications. The first step in getting out of debt is to take a realistic look at your income and expenditures. You can use a free online debt management calculator to create a picture of your current financial circumstances and estimate how much you can afford to repay your creditors each month. An objective, reliable credit counsellor can work with you to decide which debt management solution will be easiest for you.

Although no debt solution is easy, some approaches will be more suitable to your circumstances than others. Getting out of debt will be impossible if you enter an arrangement that requires you to make payments that exceed your budget. The easiest solution will accurately reflect the severity of your financial circumstances. If you cannot cover your monthly household bills because of overwhelming unsecured debt, an Individual Voluntary Arrangement or even a bankruptcy may be more appropriate than a simple debt repayment plan.

Completing a Debt Management Programme

Once you’ve entered a debt management programme, the work has only begun. With most debt management plans, you are not allowed to take out new loans or acquire any additional debt until you have met your current obligations. If you’ve grown accustomed to using your credit cards for routine expenses, or you have trouble controlling impulsive spending, you may have difficulty meeting the terms of your arrangement. A debt manager can provide advice and support as you make the necessary lifestyle changes to achieve your goals.

Minimising unnecessary expenditures and channeling the money you save into paying off your debts will help you get out of debt more quickly. If you receive an unexpected bonus at work, a gift of cash from a relative or an inheritance, consider making an additional payment on your loans. Before making additional or early payments, check the terms of your debt management agreement to confirm that there are no fees or penalties for early repayment.

Building a short term savings account will help you to avoid taking on further debt as you’re regaining control over your finances. With the funds in an instant access account, you can cover auto repairs or other unexpected bills. You can also save for large purchases, special holidays, gifts or deposits on assets like a home or an automobile. Purchases that you might have once charged to a credit card can be paid for with your savings. Getting out of debt is not an easy, overnight process, but the rewards of financial independence are great.