There are millions of people in the World who are trying to climb out from underneath a mountain of debt which they can no longer afford or pay their way out of. Poorly managed debt can cause a wide range of problems in someone’s life from depression to stress that has an impact on all of those around them.

Getting into debt is very easy, getting out? Not so simple but we are here today to give you a step by step guide of finally getting out of debt. It won’t be easy and it will take time, but in just a few short months, you can start to feel a whole lot better about your debt situation.

Face Reality

When debt begins to pile up and letters and phone calls start coming with payment demands, many people decide to bury their heads in the sand and pretend as though nothing is happening, this is the worst thing that you can do. If you want to get yourself out of debt then the first step is to face reality. Spend a day collecting all of your debt information and write a comprehensive list of who you owe money to and how much.

Personal Balance Sheet

As part of facing your financial reality you should create a personal balance sheet of exactly how much you earn each month and how much you need to pay out for rent, mortgage, utility bills etc. The figure that you are left with is how much money you have to pay off debts and to live.

Contact the Creditors

Creditors don’t like chasing money down just like you don’t like being chased and if you are trying to get out from underneath the debt mountain then you need to have an honest conversation with those who you owe money too. What you are looking for here is to come up with a new and improved payment plan based on what you can actually afford. Most creditors are more than happy to alter your payments if it means that they will actually get some cash each month. Be honest when speaking with them and let them know how much money you owe to others and create a sensible payment plan.

Honor Your Agreement

Creditors are far more likely to be flexible with you if you just pay what you have agreed to pay each month, don’t fall into the trap of thinking that you can play fast and loose with them, if you have made a deal, then honor it.

Cut Back All But Essentials

It won’t be very fun but whilst you are paying your way out of debt, it is essential that you cut back on your spending, no more holidays, no more Starbucks, no more nights out. The pain you will feel during this time will only add to that sense of relief when you finally pay off all of your debts.