Published in on Monday, April 20 2009 by Ideal Debt Solutions
In these credit-crunch affected times, you’ll see and hear a lot about “easy ways to get out of debt”. Of course, if you’re blessed with a decent amount of common sense, you’ll realise that this is largely nonsense. The truth is that there is no easy way out of debt. If there was, everyone would be spending like mad, then taking the easy route to being debt free.
The irony is that this is exactly what millions of people in the UK have been doing in recent times, but - whatever anyone tells you – there is no easy way out. There are ways out, but each has its own distinct disadvantages.
So, first things first; how do you get out of debt?
There’s a simple equation which is that if you earn more than you spend, you will become debt free. So the first step is to face up to your situation in a realistic way. A good idea is to discuss the situation with a friend to take a close look at your income and expenditure. You’ll be surprised just how much careful budgeting will help. Many people are at the “tipping point” of being in a surplus each month, but the steady effect of not being able to balance the books each month has a huge effect as the debts and interest payments multiply.
Creating a surplus of income over expenditure takes self-discipline, but it also takes a determination to get the best possible deals on all your necessary outgoings such as food, utilities, credit cards, mortgages, banking and insurance policies.
When you’ve done all you can yourself to turn things around, take expert personal debt advice from fully licensed debt counsellors and insolvency practitioners and/or from reputable and completely objective sources such as the Citizen’s Advice Bureau.
An adviser can help you work on a debt management plan to gradually get you completely debt free.
BUT - if there is really no chance of clearing your debt through your own endeavours, then bankruptcy (Individual Voluntary Arrangement) may be the only way out. Each of these has its own pros and cons, but don’t fear the consequences. Do what you need to do, and ask the finance experts to steer you through the process. And remember, you are not alone.