How to Get Out of Debt in 4 Easy Steps
Paying off large chunks of debt can feel like trying to summit a snowy peak in sandals. In the UK, personal debt rose by a third per person in 2022 according to Money.co.uk, making the journey to better, debt-free living especially daunting. It’s no surprise that many give up before covering any real ground towards their future financial security.
Knowing how to get help with bills and how to get out of debt can be overwhelming, but we’re here to offer you hope and help you attack your debt head-on. This article outlines different types of debts and multiple strategies and tips for getting out of debt you can use to squash your bills once and for all.
The main types of debt you should know about
From medical emergencies to car wrecks, life can toss plenty of unplanned expenses at us. Below are the most common types of debt.
Credit card debt
Too many people aren’t sure how to get help with credit card debt. Credit card debt can also be some of the toughest to pay down. When paying only the monthly minimum, high-interest rates often add years to payment plans, making it nearly impossible to get out of credit card debt. In the UK, 65% of UK adults had at least one credit card in 2020, according to Money.co.uk.
Student loan debt
Discharging student loan debt is nearly impossible for most borrowers. Even after declaring bankruptcy, you are required to prove “undue hardship” to a judge in order to make your student loans disappear.
For more resources on how to get out of student loan debt and paying for school, take a look at these related blog posts:
- Crowdfunding Student Loans to Pay Off Debt
- How to Pay for Medical School Without Living in Debt
- How to Pay for Grad School: Master’s Degree Funding
Private health care
More people in the UK are turning to private healthcare to pay for treatment. This may be because the waiting list on the NHS is too long or it isn’t something available on our healthcare system – but it costs money. According to The Guardian, last year 272,000 people used their own funds for private diagnostic treatment or operations.
4 steps for making a plan to conquer debt
Every successful goal starts with a plan. Thankfully, there are multiple resources available that show you how to get out of debt and create a budget for the first time. If you’ve ever wondered exactly how to get rid of debt but didn’t know where to start, we have four initial steps to help you get started.
1. Determine how much debt you have
The best way to get out of debt is to compile all of your bills, look at all of your accounts, jot down interest rates, and list everything in a spreadsheet. Knowing the balance amount of how much debt you owe is half the battle.
2. Figure out what you should pay first
It makes sense to start paying the debt with the highest interest rate first. But if this will take you years to do, paying off a smaller debt much faster might give you the motivation to keep going. Try exploring different tools such as a credit card calculator that will tell you how long it will take to pay off your credit cards, like this one from Money Helper. Reducing the sheer number of creditors you owe will make finding help getting out of debt a significantly easier task.
3. Layout your budget and track spending
A good budget is everything when learning how to get out of debt and coming up with extra money. Actually sticking to that budget is even more critical. These finance tips can help:
- Pad your budget to account for extra expenses and things that inevitably crop up during the month.
- Use a budget website or apps like Emma.
- Try the debt snowball method. Once you pay off one debt, roll that money over into the next debt you want to pay off.
4. Cut out the extras
It’s easy to forget all the online services you’ve subscribed to, so do a deep dive and unsubscribe from anything that isn’t a necessity. Do you really need to buy Netflix, HBO, or that monthly organic food subscription box? If you cut out these services, you’ll likely find that you’re saving more cash than you realised. Without these extras eating into your budget, you’ll be able to get out of debt fast.
3 debt relief options to explore
Getting out of debt for medical expenses, student loans, or credit cards isn’t always easy, but you don’t have to face your debt alone. Here are three ways to help you find out how to get out of debt fast.
1. Loan consolidation
If you have multiple loans to pay every month and some or all of them have high-interest rates, you might consider looking into loan consolidation. When consolidating loans, a lender issues a single personal loan, typically with lower interest rates. Money Supermarket offers resources on different loan consolidation options. Be sure to check your new loan policy to make sure your interest rate will remain low and won’t increase over the life of your loan.
2. Credit counselling and debt relief services
If you’re wondering exactly how to get out of debt, credit counselling, and debt relief services might be a good jumping-off point. Just be careful about which credit counselling or debt relief services you use, because not all of them are reputable and they may sell services that put you further into debt. The FCA offers helpful tips to avoid scams so you don’t end up doing business with a company you’d rather avoid.
3. Crowdfunding
People have found that crowdfunding is a fast way to tackle their debt when unexpected circumstances set them back financially. Through GoFundMe, you can easily reach out to friends and family members to get back on your feet and get out of debt. To help you get started, check out these simple fundraising ideas. Once you start the hard work of paying down your debt, you’ll be able to set aside part of your income to start to save money for the future.
Every situation is worthy enough for crowdfunding, and people from around the world use GoFundMe for causes both large and small. It’s important to remember that nearly everyone experiences a time in their life when they have to deal with some kind of financial hardship. Your own experience might serve as a reminder to people that everyone deserves to receive help during tough times.
GoFundMe success stories of people facing debt
These are just a few folks who were able to meet their fundraising goals through GoFundMe when they experienced a financial setback:
Antonio put time, effort and money into constructing his coffee kart and forging his business. One night, Antonio’s van was stolen – along with his kart, coffee machines and signage.
He didn’t have the money to replace it and felt like giving up on his dream. So friend Chris started a GoFundMe to help him out. They raised more than £6k and just over a month later, Handles was back in business.
Brian’s taxi Dora was hit by a drunk driver – and insurance wouldn’t cover to help her get on the road. Dora is Corby’s ‘most famous taxi’ with her distinctive pink paint.
On hearing that Brian and Dora were in trouble, a GoFundMe was set up to help them and get Dora back on the road.
Feel empowered to tell your story and eliminate your debt
Thousands of people start fundraisers on GoFundMe every single day so they can conquer their debt and the stress that goes along with it. You can find emergency financial assistance, too. If you’re one of the thousands of people who search “how do I get out of debt,” take the next step in your journey. Learn how to get rid of debt and sign up to start fundraising today.