Debt free in 2009

With Christmas behind us, many of us are taking a good look at our finances and wondering whether `debt free in 2009` would be a realistic goal for the year. Even if it isn`t, there`s a good chance you could make a real `dent` in your debts, which means less interest to pay - and a safer financial future.

Know where you stand

Whether you`re confronting multiple debts or just looking for the best way to clear your Christmas debt, the first thing to do is make a list of all your debts. Store cards, overdrafts, utility bill arrears, student loans - it`s easy to overlook a debt that`s just slowly paying itself off in monthly direct debits.

Making a comprehensive list is vital for two reasons:

1. you need to know what`s going out of your monthly income.
2. it`ll help you spot where you could speed up the repayment process.

Draw up your `Debt free in 2009` plan

Can you overpay some of your debts? Different debts come with different rules, but you may be able to pay off some of them (e.g. credit cards, store cards & overdrafts) a lot faster without any negative consequences.

So - figure out how much money`s coming in every month, and how much `spare` income you should have every month once you`ve accounted for all your essential expenses.

Once you know this, put as much as possible towards the debt:

1. with the highest interest rate
2. which won`t charge you for overpaying.

Once that debt is cleared, move on to the debt with the next-highest interest rate.

Talk to your lenders if necessary

If you can`t even keep up with your normal debt repayments, it`s vital you talk to your lenders straight away. Coming to an agreement with them could save you a great deal in the way of charges - not to mention damage to your credit rating.

If you`d prefer, you can always ask debt management professionals to do this on your behalf - it might be worth paying them a monthly fee if it brings your debts under control.

Stick to it

Whatever plans you draw up, stick to them. Your chances of becoming debt free in 2009 will be a lot better if you:

1. cut back on your spending for as long as it takes
2. make every single payment
3. contact your lenders (or your debt management representatives) if you run into any financial problems that could interfere with your repayment plan.

Don`t be discouraged

Depending on how much debt you`re facing, you may not be able to get debt free in 2009, but you should be able to reduce your debts considerably - and that means:

1. you`ll be paying a lot less interest in the long run
2. you`ll be better prepared for anything unexpected, whether it`s a sudden expense or something major like losing your job.

Remember: this is just a quick overview. For more in-depth guidance, either click here for an online debt guide or call Think Money on 0800 195 2911.

Tags: debt, free, 2009, debt free, debt 2009, 2009 debt, debt free 2009

Our initial advice on your best financial solution is free. Fees payable when continuing service is provided. Calls may be recorded for training and quality purposes.