1. Discover you're Budget,
A breakdown of the monthly outgoings and income is the excellent starting point to reveal the root causes of where your money is going. The first thing it will tell you is how much actual money you are actually pulling in (or losing) every month after you take away all the expenses. If there is a net gain, you can use this net gain to pay off debt. If there is a net loss, then you'll need to go back to your budget to figure out what expenses are drying up your income.
2. Differentiate between 'Core' expenses and non-essentials
Now that you have a breakdown of all your expenses, you need to scrutinise the need for each and every one of them. One way of doing this is to categorise them, into essentials, such as food, mortgage, water, utility bills, etc and non-essentials, shopping, eating out, etc.
This first pass allows you to identify where you don't need to spend money on. The next step is to slim-down your expenses. Now that you know what you need to spend to survive, find out if there are ways to cut down on those numbers (eg: cut-down on phone bill by getting a better deal?). Keep in mind that the objective of this step is to come up with the highest possible monthly net GAIN rather than a loss.
3. Work out a debt repayment plan
After you work out your budget, you should list down all your debts, i.e. credit cards, mortgages, overdrafts, etc. Obviously, you won't be able to pay off all the debt in a short time frame, so you must be able to work out a long term strategy to pay off all the debt. Based on how much net gain you have per month, you should utilise this number and proportion it to pay off all the debts. Remember, the repayment should be built into your budget, so it becomes a sort of 'core expense' that you need to pay off every month. Decide if an IVA could help you, this could reduce your debt by up to 75%.
4. Make it a lifestyle
Ridding your life of debt is a lifestyle and requires discipline, if you have followed through the three steps above and worked out a long-term strategy to eliminate debt, the only thing stopping you from reaching your target is yourself. Have the willpower to stick to your plan and always keep in mind of your objective: to eliminate debt. It may seem bleak in the short-term, but in the long run, your debt will slowly, but surely go away!
