Get out of debt and stay out

Before we start, everyone has different debt problems, these are just a few tips on how to reduce and avoid debt. If you feel these cannot help you or you’re still worried please contact someone who can help further, speak with your university or college about the problem and/or visit DebtAdviceFoundation (Charity)

Important warning:
Be extremely careful if you’re looking at debt reduction/management agencies, in the long run you may find yourself worse off. Seek professional advice!


Step 1) Time to create a Spreadsheet (Yes you can cheat and download one)

Yes this is boring but stop moaning & just get on with it.

Download this great Excel spreadsheet debt reducing layout, this is created for US $ accounts, but the same rules apply. Please note it (the code to create the graphs) will only work with Microsoft Excel, but you can still import into Google Docs & OpenOffice to see how it looks.

Complete/Create the spreadsheet with everything you owe money on the following columns will probably help:  ‘Creditor Name’ i.e. Barclays Credit Card, ‘Balance’ i.e. how much you owe, ‘Rate’ i.e. how much are they charging you, ‘Payment’ i.e. how much you’re currently paying.

You need to list out EVERYTHING that you owe money on:

  • Credit cards
  • Store cards
  • Money owed to family/friends
  • Bank fees
  • Loans (Personal, Car, House)
  • Bills (Water, Gas, Electricity, Phone, Internet, Council & Rent)
  • Remember to list everything, hiding something is pointless!

You now need to list how much money you’re making/getting each month & focus on paying off the highest rate of interest, i.e. if you owe £500 on a credit card (@ 15%) & £1000 on a store card (@ 27%), pay off the highest % value first i.e. the store card.

Step 2) Budget Budget Budget Budget!

Find out how much you’re can comfortably live on, i.e. food, drink, clothing etc

Now reduce the above amount by half, yes it’s drastic but you’re the one in debt!
Try it out for 1 week, constantly reducing where ever you go.

Remember you can use freebiesglitchesreduced items and general money saving to help you out.

Step 3) Don’t be stupid!

“I couldn’t help myself, the jacket was too pretty” – Sound familiar?
Why didn’t you – Go into your wardrobe and be productive, find something old and hardly worn and swap it online?

“Quality night out, but wish I hadn’t spent £35” – Sound familiar?
If alcohol drives you on a night out, why not do some pre-drinking before hand, it can save you £100’s per year.

“Got a pizza on the way home last night, waste of £5 as I don’t even remember it” – Sound familiar?
If pizza is your thing, buy some for the freezer and make them when you get home. If you know you’re going to be smashed, cook them before you go out and warm up when you get home, less risk of fire & or burnt pizza!

The point is reduce obvious unnecessary costs

You might feel happy at the time of buying but at the end of the month, when you have no money to even go out you will regret it.

Good with scissors?

Why not do something like the below video & create a whole new outfit from something you would never wear again!

Step 4) Keep on top of your daily spend

So you’ve reduced your daily spend on food, drinks etc. You will now have a slightly healthier bank balance, but remember this money isn’t yours, it’s actually the companies who originally lent you some money, i.e. those pesky credit cards & loans. Tip: Withdraw cash at the beginning of the week, only use this cash for your weekly spending, it will help you budget as you can actually see what you’re spending.

Time to freeze those credit cards (literally)

Grab a plastic freezer bag, partially fill it with water, gently tie the handles & place in freezer.

Wait a few hours, open up and place credit card in centre of ice, fill with more water tie handles firmly & place back in freezer.

Now you won’t have the opportunity to spend what you don’t have, but the card is ready for a real emergency, it sounds stupid but this technique works!

Alternatively (& less drastically) give your credit card to someone you trust, a friend or family member who will say no to you, when you ask for it, but knows you well enough to give it you in a real emergency.

Get online banking!

Online banking is one thing lots of people (thankfully the older generations) hate the idea of, but if done correctly can be perfectly safe & can save you money.

How can it save me money?

By regularly checking your balance, you can quickly see if you’re going to have any payment issues within the month. You can then adjust spending accordingly and reduce the risk of being charged by your bank for an unauthorised overdraft.

Remember unauthorised overdrafts can cost you hundreds of pounds!

How? Well depending on your bank they will charge a fixed amount per day or % of the unauthorised amount. In previous years these charges have had no cap, so in theory you could rack up £100’s of debt with your bank, most banks have since changed this but many still charge insane rates! Make sure you check what your bank will charge and if it’s too crazy consider switching bank accounts.

Step 5) Time to ring around

Contact all companies you regularly pay and request a reduction in charges + ask to be setup for direct debit & request a reduction for that as well:

  • Phone company (Mobile, Internet & Landline)
  • Gas / Electricity / Water companies
  • TV (If you’re paying for Sky you shouldn’t be on this page)
  • Car (Insurance, Roadside assistance)

Why would a company give me a reduced rate?

Companies have spent lots of money acquiring you (TV adverts, Online adverts, market research etc), so it’s cheaper to give you a reduced rate than to lose you and then try and get you back.

Direct debits also save hassle for both you and the company, its automatically done and will not be forgotten by you or a computer system along the way. Remember to compares prices (see step 6) before setting up direct debits, otherwise you will set one up and then have to cancel it!

Are direct debits safe?

Yes, be sure to check with your bank if you’re unsure & make sure you download/request the direct debit forms directly from the company.

Step 6) Time to switch

You can switch credit cards, loans, utility bills, supermarkets & banks to save money, learn more about comparing prices and switching.

It’s always best to contact your current provider to request a reduced rate, always point out what other companies are offering.

Step 7) Destory store cards/accounts (But make sure they’re paid off first)

& think before buying!

You generally can find items cheaper on the internet anyway, so why pay more and then risk paying a further 20-30% on top by using a store card.

Also don’t use services that offer – pay a certain (low price) amount per month for something i.e. 32″ TV pay as little as £3.50 per week, great but the price of the TV has just shot up 40%!  These ‘services’ are here to rip you off!

Follow this simple rule:


Step 8 ) £10 a month = £120 a year!

Thank you, we know our maths is quite spectacular, but the point here is £10 doesn’t sound like much, but £120 does.
It’s all about how much something costs a year not, per day or month.

Getting a sandwich from Subway a few times per week might ‘only’ cost you £9 or so, but that could easily equate to £500 a year especially with those yummy cookies!

Remember to buy products in bulk to save money or even better buy products that are past their “best before” dates.

Step 9) Make sure you actually understand your student loan!

Without student loans many wouldn’t be able to afford university but many don’t realise how much they will actually have to pay back at the end.

Step 10) Re-evaluate your money situation every couple of months

Once you’ve done this process once, it will be far easier the next time.