If you end up building debts on your credit cards, it’s time to look into your finances and replan how to get out of the loan you have built up. No matter how big or small the amount is, you can set up a way to come out of debt in a year. Making a few minor changes, and a few drastic ones, will clean out the financial mess you have created. Read our step-by-step guide on getting out of the black and emerging into a debt-free life:



Work out the debt amount you have

Sit down and calculate the debt you owe in credit cards or mortgage.
You need to know how much you owe to each company. You should determine how much your debt repayment is every month, and if it exceeds 20% of your net monthly income, you may be in trouble.


Create a budget

Draw a budget according to the debt you have calculated. The schedule you make will draw out how much you will pay each debt company a month. Keep your target payments realistic and match it with your budget and expenses.


Stay away from more loans

You may be drowning in debts, but taking a loan from even your sibling will increase your money owed to others. Repay what you already owe before thinking about taking a loan. Do not add more loans on your credit cards too.


Keep a check on your expenses

You have to allot a set amount each month for expenses and stick to it. You should not exceed that limit, and have a emergency fund every month which has to be used for emergencies only, like a car accidents, a hospital visit, a sudden birthday, etc.


Be organized in payments

Pay all your bills with direct debit, as sending cheques is more time-consuming. Paying directly will offer a discount on payments too. You have to call your bank and tell them about the energy suppliers and how to pay for them.


Lower your interest rate

Negotiate your interest rate with your bank, as by doing so, you can save a few percentage points on the bill. You will have to convince your bank to lower the rate so you can pay off the debt. Also read Credit Card Hardship Letter for ideas.


Earn more money

Look for a promotion, a pay raise, or even a second job to begin making more money to pay off your debt. You can also look for stuff you aren’t using at home and sell it off to ass more money to your bank.


Fix your mortgage

Mortgages take off a huge chunk of one’s monthly income every month. So make a deal to lower it’s rate. You can speak to an independent financial adviser to remortgage your property and save money in switching it.