If you have followed step 1 to becoming debt free you now have a total debt figure calculated. Now we need to know more about your income and other outgoings. This will give you an idea about how much money you have to spend each month to service your debt repayments.

Using your bank statements make a note of all credits on your account. This will include:

· Wages/Salary

· Benefits (eg. Tax credit/child benefit)

· Any other regular income

Add this up to give you a total monthly household income. Now make a note of your regular outgoings which will include:

· Mortgage/Rent

· Food

· Utilities (gas/elec/water/telephone etc.)

· Council tax

· Insurance

· Other (TV licence/subscriptions etc.)

This second figure should EXCLUDE any repayments made to service debts. Hopefully the first figure will exceed the second and the difference is the amount you can afford to repay to your creditors.

Taking into account the amount of debt you owe, the number of creditors you owe to and the amount you can afford to repay we can now calculate the best debt solution for your individual circumstances. There is a simple debt solution calculator on our website which will give you an initial idea.

Now we move on to the third and final step. Getting professional debt advice.

Categories: Debt, General