The first step to becoming debt free is to calculate your debt. The amount of debt you have will fluctuate on a daily basis as interest is added and further spending is made. However you do not need to know to the exact penny how much your debts are. A rough figure will do.

Start by looking at your bank statement to see where money is being paid out. This should show you where debt repayments are being made. Focus particularly on credit cards, store cards and loan repayments. Then dig out your last statement from each and write down the total outstanding in a list.

If you have access to online banking you may be able to log-in and find out a more exact figure. In this case make sure you note down the figure outstanding on that day. Some of the debts you may currently have include:

· Credit Cards

· Store Cards

· Personal Loans

· Car Finance

· Catalogues

· HP Agreements

Many of these type of debts attract high rates of interest so each month you leave a balance outstanding your debt problems will get worse. Replacing them with a lower interest loan over a longer period could save you money each month. However you need to make sure that once they have been repaid you don’t take out any more credit until your loan has finished. This will leave you debt free.

A debt consolidation loan is just one way of solving your debt problems. There are others including debt management or an IVA. Step 2 to becoming debt free is to identify the best debt solution and we will cover this topic in our next blog post.

Categories: Debt, General