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I had debts of £57,000 costing me £986 per month. Now all I pay is £190 per month for 60 months"
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Borrowing to get out of debt

Borrowing to get out of debt will only get you deeper into debt, Fact. Once you are in debt you will probably a notice an increase of mailshots through your door from loan companies selling you cheap Consolidation Loans at unbelievable APR rates. These loans can be very expensive and you will more likely end up worse off than when you started. In most cases, the lender will require you to put up your house as security. Fail to pay and you'll lose the roof over your head.

An increase of junk mail can also be the result of recent applications for credit. This is because when you apply for a bank account, credit card or loan, somewhere in the small print is a condition that says the company can sell on your information on to third parties. These companies buy your information and then bombard you with loan offers because they know you are in the red and need help.

Don’t be tempted by these unbelievable offers. 9 times out of 10 there are unbelievable because there are just that… unbelievable and untrue! Remember ‘You can never borrow your way out of a debt’.

Live within your means

If you want to stand any chance of paying off any sizeable debts in the near future, you need to maximise your disposable income. This means spending less than you earn, boosting your income and reducing your expenses. Try our Budget Planner to help you do this. There are many ways you can do this from taking on a part time job or even a car boot sale every few months. A good way to create another revenue stream would be to open an Ebay account. There are millions of items sold on Ebay each day ranging from as low as 1p up to six figure sums. Setting up an Ebay account would allow you sell any unwanted items and create extra income. Thousand of people across the world have set up small businesses from home through Ebay. If you found a product you could purchase at wholesale price you could setup a Ebay shop and sell it a retail price.

Know where your money goes

One of the most important steps to get out of debt is to know where you money is going, After all, what use is making extra money if you don’t know where your spending it. According to one recent report, we Brits can't account for an eighth of all of our spending. This comes as no surprise when you take into account our reputation for an inability to budget sensibly. Start by make a list of all your outgoings, direct debit and standing orders. If your unsure what these are and you have internet banking, log on to your account and click the ‘direct debt’ or ‘standing order’ tabs. You can use our Budget Planner to help you do this.

Learn to Budget

If you can't measure your money, you can't manage it, so it's vital to learn to budget. Set yourself a maximum for each area of spend, i.e. £100 per week on food, £40 per week for housekeeping etc. With an accurate budget, you'll be able to cut out unnecessary expenses, stop running up big debts and save money. If your debt problems are coming to a head, a budget will show you how much spare cash you have. This will also help when communicating with your creditors because you'll be able to make realistic offers to pay them back over a period of time.

Minimise your interest bill

Although a large debt may be a pain in the rear, it's the interest which adds insult to injury. For example, a typical credit card charges an annual interest rate of 15.5% APR, which is a high price to pay for the convenience of paying by plastic. For store cards, the typical APR rises to a sky-high 25.5%, which is daylight robbery.

When you start to have money to spare

Budgeting is all about having the willpower to stick to your plan. If you do this you will soon start becoming debt free and building up a surplus a spare cash. You may want to think about putting spare money into a savings account to pay for unexpected expenses, or towards a major expense (for example, a holiday or the deposit on a new car). If it's a reasonably large amount, it's a good idea to invest it so the money grows. Shop around before choosing a savings or investment product to make sure you're getting the best deal. You may also want to take professional advice before you make a decision.

Willpower is the way forward

If you're going to get out of debt, you need determination, discipline and a plan. It's takes great self-control to curb your spending, especially when the rest of society seems to be spending like there’s not tomorrow. Cut back on treats and life's little luxuries will speed up your Debt Management Plan and can bring your debt-free day forward by months or even years.