You are an anomaly if you don’t have any debt in todays buy now pay later culture. That’s a club that most can only dream to be a member of. We all want to get out of debt. On the assumption you follow some basic common sense principles the great news is that it is more than achievable. Below are a few methods to instigate a debt management programme and regain financial freedom.
Of course… you don’t have to enter into a debt management programme should you not wish to. The simple fact is you could accomplish what these programmes offer to do for you by yourself! Having said that it can be difficult to communicate with some creditors whilst having to work a full time job, look after the family or do both! The added stress of dealing with creditors can be a step too far for many people in financial difficulties. Especially when the pressure starts to mount.
It’s probably fair to point out that some professional debt management companies may be more conscious and aware of the law and leglislation around consumer credit and they probably have contacts within the credit institutions that can help to fast track things and remove some of the brick wall like dead ends you may confront.
If you are somebody that needs some sort of accountability to get started with your debt payment programme, then a credit or debt management programme will provide that service for you. You should be aware however that some of these debt management programmes will not help you unless you have already fallen behind with your repayments. You should investigate up front what the requirements are and if you can meet them.
Your Own Debt Management Programme
Before you begin your own debt management programme there are a couple of things you will want to do:
* Stop using any credit cards that are close to the limit. It doesn’t make any sense to carry on using them if you are trying to clear them.
* Work out your total debt. You need to know exactly what you are starting with in order to devise a plan to cut it down.
* You can start in the same way you would if you were working out a budget. Gather together your monthly bills and your credit card statements. If you already have a budget laid out then use that to get the figures that you will need to work from.
* Once you’ve totalled up how much money goes to recurring bills, work out what is leftover. Don’t include credit card bills in with the regular bills as these are the ones you want to clear first.
* Your next step is to decide how you will split that leftover money and where you can cut the costs and save the most. We all need to shop for groceries but see what you can cut back on and put towards your repayments. You don’t need to stop buying anything if you don’t want to, you could simply switch to the supermarkets own brand or switch supermarkets.
A Double Incentive
But obviously the biggest savings will come if you do stop buying certain items. Here’s an idea, a lot of us consider getting fitter so maybe you could cut down on the ‘treats’ a little and your health will benefit as well as your bank balance. Now how’s that for an incentive. 
Trying to pay an equal amount to all of your creditors will not get any one of them off your back any time soon. There are a couple of choices when it comes to a pay down strategy -
* The Snowball effect – this involves starting with the creditor with the lowest balance and committing as much money as you can afford to pay it off. Once that’s done, you move to the creditor with the next lowest balance and so on.
* Stacking your debt – Here you start with the highest interest rate creditor. Pay as much money as possible towards it and get it out of the way and then move to the next highest and so on.
It’s important to remember that you need to continue to pay the minimum to your other creditors to avoid falling in to arrears. Whichever plan you choose with a little self discipline you will see a light at the end of the debt tunnel and regain financial freedom.
