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How to get out of debt in 5 easy steps

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Debt is the devil. It stops you making money, keeps you awake at night and can make life unnecessarily expensive. Get rid of it as quickly as possible. Here’s my step-by-step guide.
1: 
Face the tiger. Get your bills out of the drawer, gather up as many statements as you can find and put them in piles in date order. Then get a lever-arch file and file all your paperwork in different sections (one for your current account, one for your loan statements, one for your credit card statements, one for your utility bills etc). Then go through your bills and statements carefully looking for mistakes and possible fraud. You could actually make money this way if you find your bank or someone else has taken money they shouldn’t have. From now on, make sure you continue to keep these files up-to-date. Any time you get a bill or statement, just file it in this ‘accounts’ file.
2: 
Snowball your debts. The cheapest way to pay off your debts is to pay them off in order starting with the most expensive. So look at the interest rate for each of your debts - the APR - and put the highest one at the top of your list (maybe you have a store card at 29%?). Then the next most expensive one (maybe a credit card at 22%?), and the next and next and so on. Then you throw as much money as possible each month at the most expensive debt and just pay the minimum on the rest. Keep going until you pay off the top one. Then do the same to the next most expensive, and so on. As you go down the list you should find that it gets quicker to pay the debts off because you have more money each time.
3: 
Cut all your costs. Start with the boring stuff like your utility bills, mobile phone, insurance etc. Spend an hour online finding cheaper versions of everything. Go to the comparisons section at Moneymagpie [link below] and switch all your bills. Make a note for yourself of when your various insurance policies finish and, therefore, when you should shop around for a cheaper one. Next, look at everything you’re spending. Keep a spending diary every day for a month if you’re not sure. Be ruthless. Cut out all but essential spending. Yes, I know it’s hard but it’s not for ever. The more you cut out now, the quicker you will pay off your debt and be free. It’s worth it in the long-run and will save you a LOT of money in interest payments.
4: 
Make extra cash on the side. Start with your junk. Go through your home and put anything you don’t want anymore into boxes. Sell your stuff on eBay or at a car boot sale. Use the cash to pay off more of your debts. Then use your time and skills. What can you do in the evenings and weekends that could make money? There are loads of ideas in our Moneymaking section here [link below]. Consider babysitting, dog-walking, online surveys, making cakes and sweets and selling them at a car boot sale, propagating seedlings, doing DIY for neighbours. Any extra cash you make should be earmarked for paying off your debts asap.
5: 
Get help from everyone. Get yourself a debt-busting buddy - maybe a friend who is also in debt and needs help getting out of it. Also, get free, professional help if you need it. The best places to go for proper, free advice is the Citizens Advice Bureau [link below], National Debtline [link below], the consumer credit counselling service [link below], and Christians against Poverty [link below]. Don’t pay for debt advice. You don’t need to and it’s a waste of money you can’t afford.

Sign up to Jasmine's free ‘get out of debt’ emails at Moneymagpie.com, so that you get help and support for the first few months of your fight against
the debt devil!


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