I occasionally get questions from reader asking how to get started in order to get out of debt. So I decided to get together a few tips on getting out of debt.

How to Get Out of Debt

1. Credit Card – If you do not have the cash to pay for an item, then you can not afford it. So stop using the credit card, only use it if you know that you do have the funds to cover it.
2. Income & Expenditure – Make a list of all your income (that’s the easy bit) then make a list of all your outgoing. When I say all your outgoings, I mean everything! Sometimes it is a good idea to spend a couple of weeks making a note of every item that you spend money on. You will be amazed on how much you spend on frivolous items. This will give  you a good idea of where your money is coming from and going to.
3. Budget – Put together a budget and keep to it. From the income and expenditure you can see how much money is coming in, this then allows you to allocate where the money will go.
4. Savings – You need to try and save some of the money from your budget for savings, or a number of different savings accounts i.e. Emergency Fund, Fun Fund. Even if you are only able to save a small amount each month, at least you should have some money in a safe place that can be used as an emergency.
5. Interest Rates – Talk to your lenders and ask them if it is possible to lower your interest rates, some companies will do this if you ask, others will do it only for a few months. Anyway if you don’t ask you don’t get.
6. Other Income – Look for other sources of income. For example Starbucks employment offers flexible hours and schedules to suit most every need.  Search the net for ideas that suit you. I would however, warn against any companies that offer a great income if you pay to join them. So if you can get extra cash in, this could be applied against one of your debts.
7. Percentage of Debt – Establish the percentage of debt that you have on each of your accounts. By getting your accounts to below 80% of its limit, this will have a positive effect on your credit score. So if for example your credit limit is £1000 then you are looking to get the balance on the card below £800. You may not care about your credit score, but it could be useful in the future.
8. Pay Off – There are a number of differing theories of doing this. You can sort your cards out from highest balance to lowest balance. Then pay the minimum amount to all the cards except the one with the lowest balance. The one with the lowest balance is given the most amount of money, till it is paid off. Once this is paid off you then do the same to the next lowest balance debt.However, you can do the same the above, but instead sort the cards out in order of interest. Then using the same procedure as above pay off the card with the highest interest first.
9. Pay on Time – Make sure that you always pay on time, this way you will not be stung with late payment fees or a hike in the interest rate on your account. Also just making payments on time will also have a positive effect on your credit rating
10. Research – Join on-line forums, follow people in similar situations on Twitter, read other peoples debt blogs. There are some fantastic people out there who have some great money saving ideas, thrift advice, money making ideas etc. Also by following others and reading their stories, you will see that you are not alone!

So it just leaves me to say good luck in your quest!