6 simple steps to get out of debt

We know how it is; one minute everything seems manageable and the next you’re faced with a mountain of money troubles. Sound familiar? Whether it’s credit card debt, an unrepaid loan or a hefty tax bill, it’s important to remember that debt is totally normal and isn’t as disastrous as you might think. A few simple steps could be all you need to get back on track.

1. Lean on a list

Sometimes, getting started on a solution is as simple as making a list - particularly when it comes to your money worries. Though we aren’t talking about your Sainsbury’s shopping list or your exercise agenda for the week, making a list of things such as what debts you owe, the exact amounts of your overdue payments and to whom they are owed, can really help ease those foreboding fears.

We hear what you’re saying, how can a simple list help me tackle a subject as serious as debt, you ask? Well, not only do lists help reduce anxiety and minimise the associated chaos that debt tends to deliver, but they offer some much-needed structure to your debt and a plan for how to get out of it. Making a list is a great way to give you proof of what you have achieved so far and what you have left to accomplish. A system is always essential, and a list can help act as the spade you need to dig your way out of debt.

2. Reduce repayments

Understanding how to clear debt and eventually write it off is a tough hill to climb; not only is there the overhanging stress that owing debt can cause but there’s also the pressure of an ever-growing interest rate. Often thought of at the last moment, we assure you that one of the best ways to help diminish your debt and reduce your repayments is by shrinking your interest rate.

Sort out your spending and think of realistic ways that you can reduce your interest rate and manage your repayments, such as tackling your repayments by size. If you start off simple with the smallest repayment, the quick wins you achieve can give you that go-ahead boost you need to repay the rest of your debts. However, if you’re in the position to think a little on the larger side, we suggest you pay off your debts in order of their interest rates - beginning with the biggest-rate card and then moving on to the lowest. You’ll be debt-free in no time!

3. Be savvy with your savings

Are you in debt but have savings sitting in an untouched account? The clue is in the name: use your savings to, literally, ‘save’ yourself from unnecessary debt. There’s next to no point in having a savings account if you don’t utilise it to minimise your money worries.

If you can relieve yourself from a few repayments by dipping into your savings account then definitely do so. It can be as simple as using the Sweep Tool on your Virgin Money Banking app Link opens in a new window to automatically deposit some dosh from your savings account to your current account. Why struggle by scraping the barrel if your savings is just a sweep away?

If you’ve struggled with poor credit history before then our better than basic bank account, the Virgin Money M Account Link opens in a new window - may be the perfect fit to help you start saving and managing your money.

4. Be better at budgeting

Let’s start by stating the obvious - no one likes budgeting. Whether it’s limiting yourself to no new clothes for the month, cutting back on social outings or not splashing out on the latest Apple product, budgeting has a reputation for being a bit of a fun sponge. However unpleasant this task may be, getting to grips with your outgoings and using any leftover cash to reduce your debt is a good way of getting on top of your debt.

If you’re struggling with your spending, then it’s time to glean back some savings: haven’t been to the gym in months? Suspend that membership. Paying for TV channels that you don’t watch? Cancel that subscription. Shopping at a high-end supermarket? Switch to your local, low-cost shop. Or, if you need help to map out your money, use our simple to navigate Virgin Money Banking app Link opens in a new window; not only will it let you know when you’ve gone over-budget, but it’ll also automatically tag each transaction with one of 20 pre-sets so you can track your transactions and see where you’re spending most of your money.

5. Get the picture and prioritise

What takes most precedence, your mortgage or your manicure? It may seem obvious, but ranking your repayments isn’t something that everybody does. Most things can be taken on and rationalised with a little prioritisation, and debt is no exception.

It’s important not to put too much weight on those repayments that aren’t as urgent as those that are, and prioritising can really help you in understanding that. We suggest going through all of your outstanding debts and evaluating their importance. Having your debts sectioned by seriousness will put you in a better position for paying those high-priority debts back first.

6. Always ask for help

Lastly, we come to the simplest of all 6 steps: talking. Though there may be a few people you owe money to, the easiest step in taking care of that commitment is opening up to those people and being honest about your situation. The sooner you speak up, the sooner you can liaise with the necessary people and put a stop to your stress, by creating a new payment plan. Sound goods, doesn’t it?

You won’t be the first person to seek help from your debt collector and you certainly won’t be the last - so don’t be afraid or ashamed to take the plunge and talk. If you’re a Virgin Money customer and having trouble managing your debt, our financial care team is here for you on 0800 141 2261.

Our current account app is packed full of clever tools to help you budget, top of your savings and sort out your spending. Find out more about our current accounts.