Most people have accrued too much credit card debt so finding ways to clear debt is important. A number of debt companies offer a wide range of solutions to get out of debt. It is also possible to save money by being more financially prudent and clear credit card debt and personal loans gradually over time.
The amount owed and income of the debtor will ultimately determine whether that person attempts to clear debt via a series of sensible measures to save money or write off debt by choosing a debt solution. The important thing is that the right method is chosen to get out of debt so investing a little time before making a decision is critical.
Five Ways to Save Money and Clear Debt
It is possible for many people to clear debt by finding ways to save money by reducing monthly spending. This reduction in spending can be achieved through a range of different methods.
- Get a remortgage. If paying Standard Variable Rate, getting a remortgage can save in excess of £200 a month on an average £100,000 mortgage.
- Buy a smaller house. Living alone in a 3 bedroom house isn't sensible. Buying an apartment will reduce the mortgage, council tax commitments and heating costs during the winter.
- Rent a room. For those who don't want or can't currently move, take advantage of the government's 'rent a room' scheme and benefit from a tax free sum of up to £4,250 a year.
- Give up smoking. High taxation means that the average smoker is now spending £1,000 a year.
- Make the work lunch at home. A loaf of bread costs a £1, but buying a a ham baguette from a bakery costs £2. Making lunch at home can save in the region of £70 a month.
Using a combination of the above cost cutting methods can help to save money. Utilising all of the above methods will allow the average person to free up in the region of £500 a month to help clear debt.
Write Off Debt with an Individual Voluntary Arrangement
An Individual Voluntary Arrangement (IVA) is a means of writing off debt after making 60 monthly payments. A number of debt companies offer help with the service. In IVA provides a genuine solution to serious debt problems and presents a plausible alternative to bankruptcy.
Get Out Of Debt with a Debt Management Plan
A Debt Management Plan provides a way to tackle debts by allowing debt companies to negotiate a deal with creditors. A single monthly payment is made which is disseminated to creditors on a pro rata basis. It can be a useful debt solution where creditor harassment is an issue.
Clear Debt with a Consolidation Loan
Whilst credit card debt has no end in sight, it is possible to clear debt in a defined period with a consolidation loan. It is important not to increase the term as that only serves to increase the amount of interest paid.
No matter how ominous a debt problem may appear, there are always ways to save money. Those that need to find a way of reducing monthly contributions to creditors can consider a Debt Management Plan or Individual Voluntary Arrangement. Always speak to a debt counsellor before proceeding with any debt solution as it is imperative that the right option is chosen.
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