| How to make a debt repayment plan
You can find your way out of debt. It just takes a plan. Here's how All you need to do for your debt repayment plan is to calculate two things: Sounds simple doesn't it? Unfortunately it will probably take a bit of work. If you get a regular salary, the first part of the question is easy - it's less easy if you're self-employed, but still possible. The second part of the question will require some research on your part, unless you already keep meticulous spending records - and if you're in debt, the chances are you don't. Where's the Money Going? Step One: Keep a spending record Record every last little cash outlay as well as big expenditures. You're trying to find out where your money is going in much the same way as a dieter tries to work out how many calories he or she is consuming. At the end of each week, break down the spending into categories such as groceries, clothes, dry cleaning, petrol, coffee, newspapers and magazines and fill in the figures. The more categories you have, the better. For example, don't just put down 'food.' Break it out into groceries, takeaways and eating out. Categorising specifically will tell you more. After just one week of this you'll probably have a few surprises. After a month you'll definitely have new information - such as how much you spend on late video returns, two daily cappuccinos, or just how much those little forays to the shops for 'an eyebrow pencil' are costing you. (Many women are horrified when they see how much they're spending on cosmetics and hair-care products - especially when so much of that stuff ends up in a drawer, unused.) Step Two: Make a plan Now that you've got a few months' worth of nice, accurate spending records, the fun really starts: juggling. You need to create a Spending Plan that is based upon what you really need, what you really earn, plus a segment for debt repayment. Most people faced with big chunks of debt try to figure it out backwards: 'I'll pay £200 a month.' But if they gave £200 a month to their creditors they simply wouldn't have enough to live on, so the 'plan,' being entirely unrealistic, is doomed from the start. You need to create a plan that is based on real figures. And you'll see, after you've allotted money for all your expenses, including such categories as clothing, entertainment and health (which might include payments for your yoga or gym class), that in fact you only have, say, £125 a month left for debt repayment. That's what you have, and that's all you can work with. And here's the good bit. No one can demand that you work with more. Who gets paid first? Now, how do you divide that £125 a month? You've got several credit cards, vet bills, money you owe your brother from a holiday you couldn't afford. (Holiday is a legitimate category in your spending plan; put some money into it every month.) You do not pay the most to the person who is the most angry at you. That's neither rational nor fair to your other creditors.
One fair and rational way to repay is this:
The key is to stick to the plan. Don't be pressurised into paying more than you can afford or forced into paying off one aggressive creditor over the others. Most legitimate creditors will be appeased when you prove that you are taking steps to repay their debt. A final, uplifting note: It may seem that it's going to take you forever to pay off your total debt but you'll probably find that once you have taken control, your money troubles won't be quite so scary. Quick checklist:
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