Struggling With Debt? This is Your Action Plan to Get Back On Track

admin | June 1, 2013

Wipe our Debt (Photo credit: Images_of_Money)

Living with debt is something you can’t really appreciate until it happens to you. Sure, no one likes the sounds of debt and we all know it’s something we’d rather avoid if possible. What you may not be aware of though is just how big an impact being in debt can have on your life and how it can affect your mood and even your self-esteem. Being forced to make compromises in your life because you can’t afford to eat out, go on holiday or buy nice clothes is stressful enough; but being in debt can also create a lot of other stresses as you feel ashamed of borrowing so much, as your belongings no longer feel like your own, and as the walls almost seem to be closing in on you.

Finding yourself in debt then is incredibly stressful, but it’s no good burying your head in the sand and hoping it will all go away. If you want to get back on track then you need to be emotionally strong enough to put your stress to one side and get proactive. In this article you’ll find a complete plan for getting your finances back to where they should be and for climbing your way steadily back out of debt. Make a commitment to follow this advice and put your emotions to one side, and you’ll find that you will recover.

Step 1: Admit You Have a Problem

As with any problem that only you can solve, the first step is to acknowledge that there is a problem and to come clean not only with yourself, but also with your friends and family around you. According to ThisIsMoney.co.uk , over a third of people in debt will hide the fact from their partners and it’s not a stretch to presume that this extends to family and others.

This of course won’t help you when it comes to getting back in the black, as your friends could have useful advice or even be able to help you financially. If nothing else, by telling your friends and family you will get it out in the open and from there you can start to deal with it and you’d be surprised how liberating it can be not having to keep this big secret as well as everything else.

Step 2: Speak to Your Lenders and Financial Institutions

You’ve come clean with your Mum and your partner, so now it’s time to come clean with your bank managers and lenders. If you discuss with your lenders that you’re having trouble paying back your debts, you may find that they can help you to restructure your repayment plan, or even reduce or freeze the interest you have to pay. This is actually in their best interests, because of course it’s better for them that you are able to pay the amount and that you don’t go bankrupt.

If your lenders aren’t understanding about your interest rates and repayments, then you should consider using professional debt restructuring. Debt restructuring services will contact your financial institutions on your behalf and will negotiate easier terms for you meaning you’re more likely to come to a satisfactory solution.

Step 3: Your Income and Overheads

Another person to speak to is your employer, and if you explain your situation you may find that your company is in a position to help you. This might be a straightforward raise, or it may just mean getting paid a few months in advance. Think about the help you need and come to your boss with that request and you will normally find they’re eager to assist.

Failing that, there are many other ways you can increase your income. Look into taking on additional work moonlighting, with part time employment or even working online. Now isn’t a time to try out new and risky ventures though – look into easy and straightforward ways to make real money only.

Likewise you should look into any outgoings that you don’t need. Things like extra TV channels or magazine subscriptions are things that should be saved for when you’re financially stable. Meanwhile even if you don’t cancel any bills, you may find that switching to another utility provider can result in big savings too.

Step 4: Debt Management

Next you should seek out advice from a debt management company or a financial advisor to recommend the best course of action for you. Using techniques such as debt consolidation, or by transferring your credit card debt there are all kinds of ways you can reduce the amount you have to pay back. Getting a debt management means getting advice and consultation to help you choose which of these strategies are best for you and that can make a big difference to your situation.

Step 5: Budget

Now that you have tipped the odds in your favor you should have more coming in and less to pay back over a more convenient time scale. That alone isn’t enough though – you also need a plan to make the most of these advantages.

Creating a budget means setting aside specific amounts of money that you can spend on each area of your life – you might have a food budget for instance and a budget for gifts and treats. To help you with sticking to this, you should keep a cash book or use an app such as Mint (https://www.mint.com/). Better yet you can also set up direct debits between your various accounts which will help to ensure you literally can’t go over budget and that you don’t miss any more repayments.

Step 6: Dedication

With all these changes in place it’s now time to just knuckle down and get to work by sticking to the plan. The trick here is not to think about the big picture which will only serve to get you down and which you can do nothing about in the short term. Once you’ve made your plan, your only concern should be sticking with it and making sure to make your repayments on time and stay within the budget. This way you’ll find that your situation takes care of it before you know it.

Author Byline :

Nick Dunin is a finance blogger for http://www.debtconsolidation.com.au. He provides effective solutions to handle financial stress and related issues through his blog posts.