Find Debt Cures

The phrase "Debt Cures" was made famous by a rather expensive book by Kevin Trudeau who is famous for a series of "Cures" books.

Much of the book is spent ranting about various government and banking institutions (information you can get free on any internet forum!) and his tips for getting out of debt are rather basic.

It is however possible to become completely debt free by yourself and there is a wealth of really solid information on the internet to help you do it.

As someone who has had to deal with debt in the past, here's my cure:

The first debt remedy

You need to change your psychology.

There are several reasons people fall into debt. The first and most common is down to unconscious spending. This is where you make a spontaneous trip to a restaurant (paid for by your card of course) or you see the perfect top in the sales. Most of this spending is small fry - that's why you don't really notice it. But it acumulates into a big credit card debt over time.

The second reason people get into debt is that they don't budget for annual or one-off items. They forget to put something aside every month for the annual car servicing or fail to budget for emergencies like plumbing disasters. When these bills suddenly appear, out comes the credit card to deal with it.

Lastly, people get into debt because of a big life change - illness, unemployment or their business going bust. The credit card comes out to pay for these things because there is no other money.

The first step to getting out of debt is to stop accruing any further debt. To to that you need to change your psychology. Start keeping a spending diary and note what you spent, how you paid for it, and the mood you were in when you make the purchase. You should be able to identify patterns, and the self-awareness should enable you to block the spending as it will no longer be "unconscious".

The next thing you need to do is set up a proper budget, which picks up all your bills, including those that occur annually, and allows you to set aside money monthly to pay for these annual expenses.

Included in this budget must be a sum put away each month for emergencies. You need to set up an emergency savings account even while you are paying down debt, otherwise you will end up taking one step forward and two steps back when life events occur (as they always do). Place this emergency money in an institution that is completely unconnected to the banks you have borrowed money (most bank rules allow them to help yourself to your savings to pay any debts you have with them), and make sure you can get this cash out at a moment's notice.

You will also need to deal with the temptation to take the easy way out and use your credit card again. Some people cut up their cards - this is a little drastic, as you may need the card if a dire emergency arose. A better way to deal with it is to put the card into an ice bag full of water and freeze it in the freezer. That way you can't get at it quickly, which means that you'll have plenty of time to have second thoughts about spending.

Once you are self-aware of your spending habits, it's easy to change your behaviour.

The next debt remedy stage

The next stage is to find or earn some money to pay down your existing debts. By setting up a budget, you will now have an idea of where the money is going and what you can cut back on. It's actually easier to be frugal in a recession because everyone is doing it. It's the latest fashion if you like, and you are less likely to get subjected to peer pressure to spend the way you were in the boom. You may find your friends are as eager to save money as you are. So go right ahead and penny-pinch in all areas you can manage. If you have a family, make it a family game to see how much you can save on spending.

For a more detailed explanation of how you go about finding money to pay off debt, and how to maximise your debt repayment strategy, this page on debt management advice.

Once you have got a plan to pay down debt you also need to repair your reputation, so that in future you can borrow for a mortgage if you want to - see this page on how to repair your credit score.

Throughout this process you need to bear in mind that there is no easy way to get out of debt - it takes discipline and work. But as long as you realise this from the start you should be able to stay the course till you become debt free. Be careful of the "write-off your debt" scams - they are preying on desperate people. Most of the time you will get a better outcome by negotiating yourself.

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