The best thing about debt is that it can be beaten. All you need (in most cases) is a plan of attack and a lot of dedication. The plan isn’t difficult to put together but it will take a lot of will power to stick to it – especially if you’re a natural spender like myself. To help you formulate your plan we have outlined the 5 steps to beating debt and hopefully giving you a happy debt free future.

Stop accumulating new debt
This can be easier said than done but continually adding to your debt will only extend the time it takes you to become debt free. Get rid of all your credit cards except one and keep this in a tin can full of water in the freezer. This allows you to use the card for an emergency but you can’t use it on a whim or because you need retail therapy. Cut the rest up and keep the bits in a jar to symbolise your dying debt!

Know where you stand right now
Crunch some numbers and formulate a chart that outlines exactly where you are with your debts right now. Phone up your lenders or check your accounts online and find out the exact balances that you owe. Also make a note of the interest rates being charged and the minimum payments they want each month. This will give you a visual summary of your debt situation and it can easily be updated as you pay your debts off.

Form your plan of attack
When it comes to paying off multiple debts most people make the mistake of concentrating on the biggest one first but you need to concentrate on the one with the highest interest rate first. Mark on your chart with a coloured pen the order of interest rates, so for example the highest rate will be number 1 and the second highest will be number 2 and so on. This is the order that you’re going to pay the debts off in so that you pay the least in the long run.

Allocate the payments
Credit card payments normally come from two sources – your surplus income or your savings. If you have savings then use them to pay off as much of the high interest debt as possible so that you pay less and save more in the long run. If you don’t have savings then you probably use what is left of your income after you’ve deducted the monthly necessities.

If you’re totally committed to your debt free plan then you’ll be willing to make as many sacrifices as you can in the short term so that you have more cash available to pay off the high interest credit cards now. This might mean buying supermarket’s own brands instead of the more expensive ones you normally buy or cooking a Chinese instead of ordering a take-away. Whatever you can do will help the cause.

Set Milestones
It’s important to have something to aim for when planning a debt free future otherwise it seems all hard work and no rewards. Set regular milestones and have a little celebration when you reach them. This doesn’t mean go shopping though! You can bake a cake or have a pub meal – anything that doesn’t require you to take on more debt.

You can also update your chart on a monthly basis so you can visually see your debt disappearing. Your last milestone should be your personal ‘Free From Debt’ day when you are literally, 100% debt free. This is the thing to strive for and as you get closer to it you’ll get the urge to get there quicker. And it’s at this point that all your hard work and commitment will really make you smile.