In debt? The road to freedom starts here

More and more of us face the uneasy situation of managing mounting debts. Whether it is trying to keep up with mortgage repayments, store cards, credit cards or car repayments we can all find ourselves in deep water.

I was struggling with an unsecured debt of around £10,000, mainly credit cards and overdrafts. See I had the foolish idea that the more credit I had, I could use it to pay off the others... well it worked for a while then I lost my job! The red letters started piling up and my stress went through the roof. Then I decided to take action and I was so relieved when I realised that there was help available and yes it was FREE!

So now that I am debt free I would like to share the benefit of my knowledge with anyone else in a similar situation who is, like I was, worried sick.

The good news is that there is no need to panic! The bad news is that you will need to start making some changes. This can be as easy or as hard as you want to make it.

Firstly:

You do need to make some changes to your spending

You do need to contact your creditors (by writing fine)

You do not need to feel threatened

You do not need to answer telephone calls from creditors

You can sort this out on your own with the right advice

You do not need to get yourself into long term debt by taking out consolidation loans

What you should do Draw up a budget of income and essential expenditure (bills etc) download example here

Stop spending on unnecessary items!! Yes those lunch time trips to the shops have to stop or at least be limited to once or twice per month. Draft a letter explaining briefly your circumstances to your creditors and offer a reasonable amount to pay back per month based on your income & expenditure breakdown. See here for an example. Send a copy of your income & expenditure breakdown along with your letter and list of creditors and make a realistic monthly offer of payment. Once you have an agreement in place, take a breath and then...

Open a high interest savings account and put in as much as you can afford each month. As soon as you have lump sum you can begin negotiating with your creditors to clear the debt. Trust me, creditors will often accept as little as 40% of the original debt to get you off their hands. More often they will begin by offering a settlement of 50-75%. See here for reasons why.

Download a fact sheet with examples of what to do here

The information I've made available here is exactly what I used to get out of debt. I contacted two UK organisations - the Consumer Credit Counselling Service (CCCS) and the National Debtline. Neither of which will ask you for a penny and they will speak to you honestly and sympathetically.

Good luck and please come back and share your success stories with others on our debt blog here