If you’re struggling to repay your debt we'll take you through every step that you need to take to turn your financial situation around and achieve the financial freedom and stability that you deserve.

This advice is intended as a basic guide only and is not a substitute for professional advice from a financial planner or debt management specialist.

Debt is notorious for sneaking up on us and causing absolute havoc in our lives. While having some debt is absolutely normal and even beneficial to ensuring you reach your goals, too much debt is not.

Steps to help you get out of a bad debt situation;

#1) Be honest about your situation & make a list of all your debt

Sometimes we may be well aware that we’re struggling with too much debt but facing the issue seems too daunting and we instead continue to sweep it under the rug. In order to address your debt head on you need to face the facts. The first thing you need to do is be honest about your debt situation and make a complete list of all of your debts.

What to take note of for each debt:

  • The total amount owing on each loan.
  • The interest rate.
  • Any annual or monthly fees being charged.
  • The monthly or weekly payments due.
  • The loan term.

Once you’ve noted all of your debts and included all the details listed above you can then move on to the next step which will help you create a debt repayment plan.

#2) Creating a debt repayment plan based on the avalanche or snowball debt repayment methods

Since you have all the important details on your loans on hand it’s much easier to get an overall picture of your debt situation and determine whether or not you will be able to cope with the minimum repayments and whether you’ll be able to make extra payments to repay your debts faster.

The snowball versus the avalanche method of debt repayment

For those that are able to make extra payments towards their debts, you can choose between the snowball and avalanche methods of debt repayment.

The avalanche method involves making all your minimum payments and then using any extra cash you may have to pay off the debts with the highest rates of interest.

The snowball method involves making all of your minimum debt repayments and then using any extra cash to pay off debts with the smallest overall balance.

#3) Create a budget based on your debt repayment plan

Now that you know exactly how much debt you have and have created a repayment plan it’s time to consider and add all of your other expenses.

This includes your living costs in the form of rent or a mortgage payment, your transport costs if you don’t own a car and consumables which include groceries.

Insurance, debit orders, contracts and other expenses should also be included next. Lastly add your wants, hobbies and entertainment categories.

#4) Adjust your budget & save BIG

Once you’ve completed your budget you may want to go back and see if there are any expenses and areas within which you could save some money or, better yet, completely cut out of your budget.

Ways to save money every month:

  • Change your mobile plan.
  • Travel using public transport or carpools.
  • Cancel your gym membership if you never make use of it.
  • Cancel golf and other memberships you rarely make use of.
  • Stop using clothing accounts and credit cards and cut out other unnecessary spending.
  • Compare to find cheaper insurance offers.
  • Plan meals, buy food in bulk and save big.
  • Be frugal, buy only the things you need.
  • Save on utility bills by being mindful of consumption.

#5) Still having trouble paying off debt? Contact your creditors.

You can look for professional help or employ the services of a debt counsellor who can take control of your financial situation and contact your creditors but, if you’re not at that point yet, why not do it yourself?

Negotiating with creditors and requesting tweaks and adjustments to your credit agreements may seem scary but it shouldn’t be. By simply notifying them that you’re having trouble keeping up with your debt repayments and need a little bit of help, you can turn your situation around.

Rules of engagement when contacting creditors

There are, however, certain rules of engagement which you need to be aware of before you go in with guns blazing. Firstly, you must know what you’re talking about and exactly what it is that you want to request.

If you want a lower interest rate that is more in line with other options on the market, make sure you have the figures and details on hand before making the call.

If you want to increase your loan term to reduce your loan repayments, use a loan calculator and find out by how many weeks or months you want to extend and exactly how this will reduce your monthly repayment.

#6) Consider debt consolidation

Debt consolidation is not a one-size-fits-all solution for debt. Debt consolidation simply involves taking out a personal loan that is used to repay all existing debts and then having to maintain only this single loan repayment.

Debt consolidation is only an option for those whose debt is primarily made up of unsecured loans including store card debt, credit card debt and other short-term and personal loans. The ideal situation would be one where you receive a very competitive interest rate on this new loan and save overall.

#7) Opt for credit counselling for dire situations

Debt management involves approaching a debt counselling agency or counsellor and allowing them to take control of your debt situation.

They will get in touch with your creditors and negotiate better rates, lower fees and longer repayment terms as necessary. You will then make a single payment every month to the debt counsellor and they will pay all of your creditors.

Debt management is not free, you will have to pay certain fees to secure these services so, if you can navigate the situation yourself, it may be worth the try.