Your Own Get Out Of Debt
Plans
Whatever combination of measures you employ to tackle your
debt reduction programme, it will become your own 'get out
of debt plan'. Use as many ideas as you can to take control and
drive your debt burden down. Endeavour to stick to your plan,
but if your circumstances change in any way, go back through
your budget, and if necessary make any changes that will enable
you to keep on target.
The Basics
- Don't spend more than you earn.
- Cut back spending
- Only buy what you can afford. Get out of the habit of
excessive spending.
- Don't pay someone else to do something for you if you
can do it yourself.
- Always shop around for the best value goods and
services.
- Keep on top of your budget
If you have cash
savings:
- It is sensible to pay off or at least reduce debts,
using savings, as the interest you earn on deposits is a
lot less than the interest you pay on debts. The interest
rates charged on credit card accounts for instance, are
two, three times higher than Bank Base Rate, sometimes much
higher if you are a high risk borrower.
If you have disposable
assets:
- Sell anything meaningful that can generate capital to
repay debts. Using lump sum payments to reduce your debt
burden, in addition to your monthly payments, can
accelerate the repayment of your most expensive debt so
that more of your repayment cash clears the amount
borrowed as opposed to just paying the interest.
If you have bank overdraft:
- Only take out as much cash as you need at any one time.
You will be paying interest on all withdrawn cash that is
still in your wallet and not being used to pay bills.
Withdrawing smaller amounts but more often may be
inconvenient, but will be cheaper in the long run in
interest saved.
- Don't use any cash dispenser services that charges fees
for withdrawing your own cash.
- Each month, aim to voluntarily reduce the maximum
amount you are going to go overdrawn. You will still have
your agreed limit with the bank to fall back on if an
unexpected expense arises.
- Keep a regular note of how much you withdraw. Cash
dispenser withdrawals can easily be forgotten and
overdrafts ratched up too quickly without proper record
keeping. Don't trust to memory, buy a small pocket
notebook, and use it to record all purchases as
well.
If you have
mortgage or unsecured loans
If you have credit card
or store cards
| 
