10 Steps For getting Out Of Debt

Anthony Wilkinson-Denny

Plunging Into debt Pic

Step 1 – Admit you’re in debt

Being in debt is a little like having an addiction – it controls your life.

Like any addiction, the first step to being free from it is to admit, fair and square, that you’re in debt. While you call it a “short-term financial challenge”, a “little oops with the money” or a “temporary glitch”, you have a problem – denial. While you’re pretending it’s something it’s not, you won’t be able to release yourself from it.

So say, “I’m in debt. It’s controlling me and I want to get out of it.” A good dose of honesty is a clear message to the universe that you’re open to being helped ... and you will be.

 Step 2 – Create a clear reason 

Unless you have a good reason to get out of debt, you won’t. Good reasons for staying in debt are that people feel sorry for you, you get peoples’ attention, and you don’t have to make decisions and so on. If these reasons are stronger than the reasons for getting out, they’ll hold you to where you are right now ... in debt.


So, to counteract the negative – the reasons for staying in debt – find some positive reasons for being debt-free:


·      You will be able to afford to see your children more.

·      You will be able to start the business you’ve always wanted.

·      You will feel proud of yourself for making a positive difference in your life.

·      You’ll be able to help others.

·      You’ll be able to get a better car, house or whatever.

Step 3 – Work out your income and expenses 

This can be a scary part but it can also be a relief – knowing the figures.

Firstly, write down all your weekly income from all sources – wages, salary, interest, welfare benefit and so on. Total them all up.

Now write down all your weekly expenses – phone, power, rent, vehicle/travel, food, entertainment, loan repayments, credit card payments ... everything! Once you have it all written down in front of you, you can see two thing:

1. Whether your spending more than youre earning, and
2. Where you can cut back on spending

 Step 4 – Calculate your net worth

Add up the value of all your assets – things you own. These are things like bank accounts, savings accounts, vehicles, furniture, computers, property and so on.

Now add up your liabilities – things you owe. These are things like credit cards, loans, unpaid bills and hire purchase amounts due.

The difference between them is your net worth. If it is a positive figure, you own more than you owe. From now on, calculate that each month (or week) and you’ll see that what you focus on, grows.
Step 5 – Share with a trusted friend

Over a third of people with debt problems hide it from their partners. Share your debt situation with someone you trust. Three reasons: 

1. A problem shared (even if it’s not theirs) is a problem halved.

2. Having someone on your side helps to keep you going, especially when things get tough.
3. They can come up with ideas you never thought of.

Step 6 – Contact the right people  

Reputable organisations, such as Pay Plan or the Citizens Advice Bureau, or a debt charity such as National Debtline will not only help you, free of charge, but can also help reduce your level of debt. They negotiate with lenders on your behalf to work out a manageable budget based on how much you can realistically afford to repay.  

Step 7 – Make a priority list ... and act on it  

From your list of debts (above) decide which are the most urgent. Those that carry the harshest penalties for default must be dealt with first. Mortgage arrears, for example, will eventually result in losing a home. Council tax arrears carry the risk of a prison sentence.

Step 8 – Speak to creditors 

Front up to the people you owe money to and tell them the truth. They will be impressed – disappointed but impressed.

The worst debtors just run and don’t face up to their debts. So, if you are one of the brave ones, most creditors will appreciate your honesty, especially if you’ve worked out a repayment plan in advance. They’ll be disappointed they’re not getting their money sooner but they’ll be happy that they’ll get it at some time.

Step 9 – Reduce your credit

Paying the minimum on credit cards is better than nothing. However, it would take 15 years to pay off £3,000 on a 14.9% card if the minimum payment of £90 was made. You would nearly halve that time if you paid an extra £60 a month.

Don’t borrow to pay off your debts – you’ll only be worse off. Cut up your credit cards. Cancel accounts you have and pay cash. Find cheaper power and phone suppliers.

Step 10 – Move your focus from spending  

Find (free) activities that you love and keep you from shopping. Stop living the dream.

Remember the reason(s) you want to be out of debt (Step 2) and stay “financially sober”.

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Anthony Wilkinson-Denny

"While the future holds so many secrets, with careful planning we can shape our future to how we want to see it. I sincerely believe that the steps to taking change starts with you, our clients, be bold and take a leap of faith into a better tomorrow that you deserve because you are Exquisite, you are Timeless”