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Tips on how to get out of debt
How to change your habits to start getting out of being in debt
Debts are not an ostrich problem.
Don't bury your head in the sand or under your pillow. Debts are monsters that need slaying. An ignored debt grows larger and more troublesome and soon grows out of its cage. Tackle it and tackle it early.
Look at other ways of getting money in.
Perhaps consider selling off bits and pieces that you have that may be of value. Ebay is not necessarily the right place to get the best price for your prized goods - auction houses, garage sales, ask your friends to buy stuff, ads in your local paper - be innovative. Consider getting an extra part time job of any description and however lowly.
Treat your debt intelligently.
Borrowing money from another source at a lower interest rate can sometimes help but it might also lead to greater problems. It's all ok when debts are small and consolidating your credit cards and bank overdrafts seems a good idea. But when you decide to borrow more it can soon balloon. So by all means reduce the intrest rates that you are paying on your debts and lower your repayments, but keep a good control over the bigger creditor picture and your spending habits. Longer term debts are often secured against your property and could lead to your losing your home if you can't get enough money over the top of your already too high expenses to pay them off.
Check that you are claiming all the tax benefits that you are allowed.
The benefit structure is calculated assuming that most of us don't claim what they offer us. Talking to a friendly accountant over a sandwich and a beer can help your debt problems alot. The internet including government and debt charity sites all offer good advice. Benefits tend to apply to your specific situation so make some time to search and ask appropriate questions on financial forums.
Like Money Saving Expert at Money Saving Expert Forums and Motley Fool Motley Fool, and government sites like The Consumer Credit Counselling Service at www.cccs.co.uk and the Department for Work and Pensions at DWP or a search on the search engines like this one throws up two or three really good debt help sites. Make sure that you are not losing out on your entitlements and ask a professional to establish what you are owed. Talk to a really good adviser.
Take some money out of your pension perhaps
It's a real no, no to take money out of your future retirement funding, but if needs really must, then you're entitled to up to 25% of your pension as cash. More information coming on releasing money from your pension at a site about 'releasing money from my pension'. Again, this needs a really good pensions adviser.
Start measuring your ins and outs.
Get a book with some lines in it - really that's as hard as it gets. Grey lines. Across the page. You get the idea :)
Start writing all your expenses, as you pay them, on the right hand pages, and write all your income on the left. At the end of each month tot up the balance and start crossing off those expenses that don't involve keeping you alive. Ditch all the rest of them (within reason!). You've already actually physically ripped up your credit card right? Impossible to live without it? - Try harder.
Talk to all your creditors immediately.
They tend to get angry and defensive when you don't talk to them and start processes that you perhaps don't want them to do quite yet. Talk to them and let them know your situation and more importantly how you intend to deal with their debt. An arrangement at this stage may just let you off the hook in between income payments. They're not always friendly and some don't care what you say or what position you're in. So determine before you set out to talk to them who are the essential ones to your well being. Make sure they are appeased above the less important ones. The others will still squeal but that you can sort out later in court if you set up a decent debt management scheme.
Prioritise your debt problems.
Sort out the debts that will mean losing your home or property, or mean losing your heating, gas or electricity, before those that are more minor. Urgent debts may not be the most important but its the important ones you need to be careful of first. So learn to talk the urgent ones into a small payment delay window that may help you deal with the important debts properly.
Make reasonable offers to your creditors.
After you've calculated what you can and can't afford, and cut down on all expenses except rent/mortgage, gas, electricity and drinking water, and a bit of bread to live off (just kidding, but surely you're not still buying biscuits, cakes, chocolate and puddings, - and while you're at it, why are you not shopping in a cheaper shop.).
Even for these essentials, look to reduce the payments on them. Switch suppliers if necessary. Perhaps use an internet price comparison site to determine if there are savings to be made by switching suppliers.
Once you've established what payments you should really be living without, and those which are perhaps not absolutely necessary, work out what balance of income you have to spend to pay off your creditors with. With this balance, start to look at your not so important creditors. Make a plan to pay off each of these in reasonable amounts over time. Offer it to the creditors whilst explaining the situation. Make notes of all your conversations, dates, times, people, and email or write confirmation letters to the other party at each stage to be clear of where you both stand and also to act as a record of your attempts to sort out an agreement which you can use later in court. A realistic offer in many cases is accepted as is. This is the basis of the individual voluntary arrangements except it's without the fees charged by the advisers, so get on that phone. Second thoughts, an adviser may be able to help in this sort of situation. Contact one.
Creditors can be difficult.
Don't give up and keep negotiating. It is often worth offering a little under what you can afford to start with to give you a little negotiating margin. Again an adviser may be able to help you with these negotiations. Don't give up negotiating.
Keep copies of all your correspondence.
The courts, if it comes to that, will consider all the efforts you have made, but only if you can show them what you've done, in writing. It is important to keep copies of correspondence you have with your creditors, and also to confirm by email or by letter, the situation each time you have a conversation with your creditor.
Fill in all the court papers and forms issued to you.
By not filling the forms in, you already put yourself at a disadvantage, and the focus becomes on your contempt for the process rather than on any reasonable settlement. So don't delay, at least be the more efficient of the parties in that respect. Denying the forms exist will not do you any good at all.
Always attend the court hearings.
The courts are there for your benefit too. If it were just for the creditors then there wouldn't be a need for the courts. Take all correspondence and your budgets etc to the court hearings and show them how reasonable you've been.
So start taking a proactive view about things, and try to make overcoming debt a priority for the whole family. With everyone working together it can sometimes really come together and get you out of trouble. But don't just stop there. Carry on really focussed until you're well and truly away from sites like this.
Good Luck!