Salary checker > Salary news > digging-yourself-out-of-debt
Negotiate the salary you want

Digging yourself out of debt

They say money makes the world go round. But it would be closer to the truth to say it's credit that makes the world turn. Let’s face it: money is sadly never going to grow on trees and debts can stack up rapidly.

When you're deep in the red, it might feel like there’s no way out but, in reality, getting your head above water is a lot less of a challenge than you might think. Just follow these simple steps and you’ll be back in the black in no time — all it takes is a little discipline.

 

 

 

 

Step 1. Work it all out

This is the bit where you need to be brutally honest with yourself. Acknowledge each and every one of your debts and write them down in black and white. This exercise alone should calm your brain a little.

Work out how much you owe and to whom. List interest rates for things like credit cards and loans, as you'll need to prioritise debts with higher rates before they bury you even further.

Step 2. Budget, budget, budget

Once you have your list of creditors and a final debt amount, you should then be able to work out from your monthly income what you can realistically afford to pay. Go for the maximum possible figure while making sure you’re not out of pocket at the end of the month, then divide that figure between your creditors. Remember to allocate more of the pot to those high interest debts.

The difficult part is picking up the phone to contact your creditors, but don’t be afraid. Customer service people aren’t dragons, you just think they are. They’ll be grateful you got in touch and it’s in their best interests to listen to your proposal and recoup their money.

Step 3. Shop around

No, not that kind of shopping: that’s the reason you’re in this mess! There are plenty of comparison websites around that will help you get the best deals on everything from credit cards to utility bills and even bank accounts. You may see the difference as a small one, but every penny counts.

While we don’t advocate taking out further credit to manage your existing debts, it’s more sensible to switch to a lower interest credit card with a 0% balance transfer rate than keep shelling out for those extortionate repayments on your current one. Don’t be tempted to keep your old cards though: once you’ve paid them off, cut them up.

Step 4. Increase your income

There are many ways you can do this. Do you have a spare room you can let out to a lodger? Do you have children of working age that can contribute towards household expenditure?

Think about getting a second job. Perhaps working a second job on the weekend. Plenty of people supplement their income with part time bar jobs. Not only are you earning extra cash, but the social setting means that you’ll meet new people and probably get bought a few drinks as well, which can be a good substitute for a Saturday night on the tiles.

Step 5. Monitor your spending

You now know how much you have coming in, and have deducted all your outgoings, including your debt repayment. The rest is yours to spend as you wish.

Divide up the remainder between the weeks in the month and keep track of what you spend. You can do this by keeping a pad and pen with you, or if you’re really rubbish at keeping a record, take out your allowance at the beginning of the week and don’t visit the ATM again until the next one (and no sneaky card payments in between). Once you see the notes disappearing in your wallet, you’ll slow down your spending — trust us.

Other options

If you really feel like your debt is too much to handle on your own, think about contacting the Consumer Credit Counselling Service or the National Debtline on 0808 808 4000. Both organisations offer sound advice and can recommend tailored solutions to overcome your money and debt problems.

Remember: sticking your head in the sand achieves nothing, but with a little planning and self control, you will come out the other side debt free. Good luck!

*The information on these pages is provided for your information and reference only. Before making any important decisions regarding your employment or any legal matter, you should consult a qualified professional adviser who can provide specific advice based on your individual position.