Nobody is very interested in being debt-riddled. There are other, far more enjoyable ways to spend life, and none of these includes receiving phone calls from dodgy debt collectors. More people are moving away from using their credit cards, which could be linked to the pinch we are all feeling. So you’re not the only one who might be looking at ways to beat the vicious debt cycle. Chances are good that you are one of several millions looking for a way out of the insane levels of debt they have built up over the years.

If you have time to do a very quick Googling, type in debt reduction and you will have access to over 16,000,000,000 web pages that deals with this subject. The amount of debt reduction programs available is staggering, rivaled perhaps only by the number of desperate applicants who want to live a little and opt for debt consolidation.

What, then, is the best way to get rid of debt?

Use one, lower-rate credit card. These could be credit cards, store cards or other unsecured loans. We all have them. They have high interest rates and make it easy to pay for things that we really do not need, and cannot afford. They may be a great way to budget; both for everyday items, as well as the so-called big-ticket purchases, but credit should be used with a lot of prudence.

You can ease your stress levels by switching to a single credit card.. You could do well with a lower interest rate – or a zero interest rate – but be careful to check the terms and conditions attached to the new rate.

Do some furious research before you commit to anything. Employ your stealth Googling skills to track down only the very best deals. You’re worth it, right? There are many, many cards out there but you want one that will transfer your balance onto a lower rate. This method relies on you to cut up the old debt-free cards and not to use them again.

Debt consolidation is king

This is not as bad an idea as it may seem. Debt consolidation can give you relief from your creditors. And yourself. You’ll be able to relax again, enjoy the moment for what it is and not fret over how you’ll be able to afford paying rent and have something to eat until it is pay day again. Finding a good debt consolidation loan – one with favourable rates – will depend on whether or not your credit score is stable. A steady income from your employment would also help greatly.

Estate sales are all the rage

What items do you have lurking in your garage? When last did these items see a glorious summer day or a blisteringly cold winter’s day? Many people are tapping into the neglected art of estate sales. There might be a couple of items laying around that you could sell for some extra cash. Do you have jewelery that you have not worn for some years? Or what about that third car that has become something of a white elephant, perhaps?

The money you gain from selling these items could be just what will save you from your debt. Use it to pay off your credit card debt or any other unsecured debt you may have.

Hold down a second job

After a hard day at the office, or the oil rig, or at the restaurant, it is not surprising that most of us would like to go home and unwind a bit. But, this is not the reality for a growing number of UK professionals. According to this article from the BBC there are as many as 25% of us who have a second job.

No one said it was fun but it makes sense: rather grimace and bear it now instead of a near certain bankruptcy at some stage in the future. Use whatever income you have now to pay off any outstanding bills. There is some arguments over this: some say pay off the bills with the highest interest rate; others say you should tackle the smallest debt first. Do what feels good for you, as long as you make an effort with your debt.

Find an escape mechanism

Your level of debt should not get you down. Relax and figure out creative ways to make money. what else can you do to pay off your bills? Perhaps you have a mortgage that will allow you to dip into it, or perhaps you have stocks laying around that you can sell.

Are you struggling to pay your mortgage? Are you battling to finance your dream home? Well, what you may need to consider is taking out an equity loan. But what is an equity loan and how will it help you?

Equity loans were developed to help you pay off your mortgage. Banks will offer lower monthly payments than what you are currently paying on your mortgage.

Home equity loans are cash that is borrowed in order for you to pay off your mortgage. You put up collateral, usually your home, and if the equity loan is not paid, the bank can lay claim to your home. The advantage of this, however, is that you will receive cash to pay off your home and lower your monthly repayments.

For instance, if you are paying 300 GBP a month on your mortgage, your payments will decrease to about 90 GBP when taking out an equity loan. In other words, you are taking out a 30 year term loan and literally paying for the same home twice.

If you are considering refinancing your home, it is a good idea to look around for the best offers and lowest rates. For those set on taking out an equity loan, ask about overpay and underpay loans, where you can get cash in your pocket on your mortgage. It is a good idea to print out contracts from various companies and compare them side by side. Compare your options and this will help you choose the best company for you.

Debt freedom is something everybody wants to achieve, but how to get there is another question altogether. In order to reach financial freedom one has to completely change the way we think about money and the way we manage it. This is not to say you have to give up on life’s little luxuries, but there is a good chance that those very luxuries are the reason you are struggling in the first place. You may have to take a long hard look at what you are spending your money on and what is really important in your life.

You should ask yourself the question, ‘Is having things now more important than having a financially secure future?’ In order to reach your dreams in the future, you have to start planning in the present. How you handle your money in the present determines how much of it you saved for the future. There are some extremely basic and simple changes that you can make in your daily life that will help you obtain a financially secure future

These changes include:

1) Stop living off your credit card. If it is not an emergency or if it cannot be paid off in full the following month, it should not be charged.

2) Keep track of your spending. Once you have determined where exactly your money is going, it will be easier to see where you can cut back. The extra money can be used to pay off credit cards.

3) Pack in your lunch at least 3 days a week. Spending money on lunch everyday is a definite money waster. Eating out is expensive, so rather pack in your lunch and save some money.

4) Instead of going to the movies, rent a movie and spend some time with the family at home.

5) Have a pizza party and invite friends to make and create their own pizzas instead of ordering out.

6) Buy in bulk and freeze dinners. This saves you time and money.

7) Instead of buying expensive gifts and cards on birthdays and anniversaries, why not hand make them? It is much more personal and thoughtful and will save you heaps of cash.

8 ) Try not to shop at boutiques and expensive department stores. Instead, why not browse through thrift shops, discount stores and yard sales. Who knows, you may well find something you like at a much cheaper rate.

10) If possible, pay more than your minimum payments on credit cards on a monthly basis. If the balance of your credit card is high and you only pay the minimum amount due, you will take much longer to pay that balance off, which will add interest as well. By paying just an extra 50 GBP a month towards your balance, you will not only save money on interest, but you will have your debt paid off so much sooner.

Before you can live a debt free life, you have to become debt free. These are just some of the few tips you have to follow in order to obtain financial freedom and security and live a debt free existence.

With just a little effort and thought, you will find many ways of saving money. Look at the things you spend money on and find ways to reduce or even completely eliminate them. With a little willpower and determination, you too will be able to enjoy a debt free and prosperous future.

Imagine the following scenario: thanks to some windfall, or careful saving for many months, you have managed to pay off all your debt. How does that make you feel? Are you unhappy that you do not know what to do with your money? are you frustrated that you no longer have to fret over unpaid bills that pile up on the kitchen counter, or on the bedside table?

No, if you’re anything like most of us in the UK, you would feel elated, relieved and start wondering how exactly to spend all that extra money!

If your debt is strangling you and you are constantly stressed by missing out on bill payments or how much you interest you are paying on your credit card, you might benefit greatly from debt consolidation.

Many families have up to nine or sometimes even ten credit cards and find it difficult to keep track of multiple credit card payments, bills, loan statements and many more. By pooling all your payments, you could find it much easier to manage your debt, and to pay it off eventually.

What options do I have?

You could apply to get an Individual Voluntary Arrangement through Harrington Brooks, or you could apply for a secured/unsecured loan. Any individual who has difficulty in meeting creditor repayments may apply for an IVA.

Secured loans use assets as collateral to back the loan should the borrower be unable to pay the installments. The interest you would receive could be much lower than that of an unsecured loan, as the lender is aware of the risk you take with your asset, which could be property or a vehicle.

Your good standing with the bank, however, backs unsecured loans, and there is no need for collateral. This could mean the interest rate you receive would be a bit higher than with a secured loan and you would not be able to pay it off as quickly, unless you become very creative in finding money to pay it!

Some types of secured loans could include a home equity loan, a home equity line of credit and cash-out mortgage refinancing. Others may include automobile refinancing, a 401k loan and using your entire life insurance, though this might be too drastic for some to contemplate.

If you do not own any assets that you could trade in, you could still count on the normal personal loans and no interest credit cards. Ensure you get proper advice before you venture through the dark pools of unsecured loans.

Your debt may very well be giving you grey hair, but it need not be that way. Consolidate your debt and you will thank yourself later, when you have managed to pay off everything!

For more information on Individual Voluntary Arrangements (IVAs), secured loans and unsecured loans call Harrington Brooks free on 0808 131 0040 and discuss your circumstances with an experienced Individual Voluntary Arrangement (IVA) adviser.

Paying your four maxed out credit cards is tough enough without the added weight of a car loan, a consumer loan and a house payment. How many of us have sleepless nights over making the minimum payment? Surely we have better things to worry about than debt?

Some of us consider debt consolidation loans to be the very best option available to us. These loans pay off other loans or lines of credit. A fair percentage of people have decided a consolidation loan will help them. Those advertisements of happy, smiling people may seem far removed from reality, but perhaps there is a grain of truth in them.

Let us take a brief look at the advantages and shortcomings of these loans.

Advantages

1. You will only make one payment. On average, UK citizens have 11 different creditors and by just making one payment, it would be far easier to budget.
2. The odds of your interest rate being lower than before are very good. The average debt consolidation-type loan is a second mortgage and its interest rate is significantly lower than other consumer debt interest rates. Mortgages are secured debts. These loans allow the creditor to repossess your assets if you are unable to pay up. Credit cards and consumer accounts differ from these loans; creditors rely on your good word and payment history and interest rates are significantly higher than that of a mortgage.
3. The monthly payments could be lower. As tempting as it is, you should not fall into the habit of only paying the minimum monthly amount. Your interest rate will surely be lower and you should have one only payment. This would be much better than having to figure out which creditor to pay in full this month, and which creditor to underpay this month.
4. There is only one creditor to keep happy. Your consolidated loan makes it far easier to deal with queries you may have about your finances. You would just need to make one phone call to a single company, instead of making three or four phone calls to different organisations.
5. Tax breaks. Paying interest towards a credit card may not be very wise. Should you pay that same interest towards a mortgage you can use it as a tax write-off.

Disadvantages

1. It is very easy to get into even more debt than before. The monthly payment is lower than what it used to be, so it is not surprising that there is money – sometimes a nice, big amount – left over at the end of each month. So we do what anyone else would do – we start using our credit cards again. Our spending habits remain the same and we do not rehabilitate ourselves, partly because there is no real need for it.
2. You spend longer paying it off. Mortgages are normally paid off over a long period, some up to 30 years. Do you really want to pay off your car over 30 years as opposed to the normal five or six years?
3. The interest rate creates an artificial sense of liberation. No matter how low the interest rate is, you will end up paying more on this loan. Would it make better sense to keep the smaller loans and pay them off rather than consolidating them into your mortgage?
4. The risk exists that you could lose everything. As long as you are aware that consolidation loans are secured loans that could drastically alter your financial situation, you should be fine. Losing your assets is not fun and in most cases, you would lose your home.

You might find you are just not one of those people who can use a consolidated loan. Or you might be only too happy to get one. Whatever your decision, know what the possible consequences may be and whether it is the right thing to do.

So many of us sell ourselves short. We believe you need to be born into riches or that you need a sizeable amount of money first before you can make more money. This is a defeatist attitude that could stop people from accomplishing much in life. It is possible to build wealth using a little imagination and a fair amount of perseverance. Sounds simple? Well, it is, but it could become boring, which is why not many people follow through with the formula.

Why do we fail?

It’s actually a simple question, when you stop to consider it. We become lazy and worry more about what’s for supper than whether we should consider a more diverse portfolio. Some of us do not even reach that stage, instead we move money from one credit card to another, just to pay for that supper!

This might work for a short little while, but only until it starts to catch up with you. before you even open your fancy wallet to pay for a ticket to the opera or for that bottle of Johnny Walker, you discover you have maxed out ₤5,000 on your VISA card and another £3,000 on your MasterCard.

Debt consolidation could be a smart move, if you know what you’re doing and you will not be tempted into racking up even more debt now that the original debt has been squashed. The phone calls will stop, which might lull you into a temporary feeling of accomplishment, but remember, there are still bills to be paid. Your monthly payments become lower and this might signal, for some people at least, an opportunity to shop up a storm, which will really just take you back to square one.

What is the solution?

There is no single solution for everyone. Although bankruptcy might seem like an attractive option, think carefully on whether this is a viable option for you?

So what is the million-pound answer? It’s easy, really. Once you have cleared your debt, you should learn to go without spending all your disposable income all at once. Take your paycheck (or as much of it as you can bear) and spend it on assets. Be on the lookout for items that will put money back into your pocket.

And no, it does not matter which type of investments you choose, as long as they all enable you to get out of the debt trap.

Credit card companies do not want you to pay off your credit card debt. Why? Because, the more credit card debt you have, the more interest you have to pay. And interest is what credit card companies need the most. Credit card companies have helped to create the belief that credit card debt is part of our lifestyle.

We have learnt to accept it as part of life and that there is nothing you can do to escape it. A lot of people are spending more money than they make, and this increases their debt at an alarming rate. As your credit card balances increase, so does your minimum monthly payments. Eventually there comes a time when you will not even be able to afford your minimum monthly payments due.

Many people have fallen into the credit card trap. They spend money paying off other debt while using their credit cards to finance their way of life. Having a credit card is very convenient, and it is this convenience that has caused people to abuse it. Why not compare your monthly income to your credit card limit. It’s amazing how much larger your credit card limit is. We use credit cards for just about everything, and to max it out is pretty easy.

So how do you escape the credit card trap and regain control over your finances? Firstly, you should change your attitude towards your credit card debt and money in general. Here are 6 tips on how to break free from the credit card debt cycle.

1) Treat your credit card as if it is a loan. It is after all a loan the bank has given you that you have to pay back. You borrow the money and you have to pay it back. Change your attitude.

2) Always keep track of your balance. Instead of watching your credit card limit, take a look at your monthly earnings. Make sure that your credit card balance does not exceed your monthly earnings and how much you can afford for that month.

3) Keep all your purchase receipts. Costly errors can be cleared up quickly if you have the necessary receipts. It can also help you work out how much you are spending and potentially how much you have to pay the following month. Put your receipts in a safe place where you will see them everyday. As you pile of receipts grow, so too will your credit card debt grow.

4) Pay off your whole balance on time every month. This is the safest way to make sure that you are not in arrears. In this way you do not pay interest and there are no late penalties. And in the long run, the savings will be huge.

It you are struggling with paying off your debt, there are different options that can help. You may want to consolidate credit card debt, or get credit card counseling. They may be able to provide some insight and make it easier to get a grip on your monthly payments.

5) Use your credit cards only in emergencies. Easier said than done, your credit cards should be viewed as emergency cards. Don’t take them shopping or to restaurants, instead use your debit card or cash. If you use cash or your debit card you can spend until your bank account is empty, but at least once its empty you will have nothing more to spend. Amazingly, a lot of people are more comfortable with their credit cards being maxed out than having an empty bank account.

6) Keep you lowest interest rate credit cards and bin the rest. If you don’t have extra credit cards, you won’t find have the urge to use them.

Credit card companies thrive on individuals with high credit balances and high interest rates. But by changing your attitude and realizing that your credit card should not be abused, you too can enjoy a debt-free lifestyle. By using these 6 useful techniques, you may be able to break free from credit card debt.