If you owe a lot of money then you might feel that you need a plan to get on top of the debt. It can be difficult knowing where to start and you may feel completely overwhelmed by the idea of it. However, there are many things that you can try but it could be best to try a methodical approach which will make it easy to cope with.

Find out how much you owe and to whom

You need to start by gathering all of the paperwork or looking online to find out how much you owe and to whom. This can be quite scary as you may not want to face up to your debts and you may have no idea how much you actually know. It is the hardest step to do though and is really important so you need to motivate yourself to do it. Include every company, person and bank that you owe money to. Look at statements for your credit card, checking account and any other accounts you have to make sure that you have got all of the information that you need.

Decide which to start repaying first

Once you have a list of what you owe, then you need to decide which debt you want to start repaying first. The most cost-effective way to do this is to pick the one that is most expensive. Looking at the charges and interest rates on each one, you should be able to find this out. However, some people find it easier to repay the smallest debt first, then they feel that they are eliminating the debts quicker and it helps them to feel more motivated to do the rest. Others may prefer to pay off personal debts – those to people they know before they pay off the ones to banks. It is worth giving this some thought and noting down which order you wish to tackle them in. You can always change the order as long as you are still repaying something. Then you need to tackle actually paying them off.

Spend less money

It is worth having a think about where you are spending money and where you can cut down. Many of us will go to the store and just buy anything we wish, without really thinking about the prices and whether we need the items. Start planning your shopping trips and make sure that you are only purchasing items that you really need rather than things that you want. This can be tricky to start with but gets easier. Also compare prices on everything that you are buying to make sure that you are not spending more than necessary. Cancel any contracts you have that are not really benefitting you and think about newspaper and magazine subscriptions, memberships, regular charity donations and things like this that you may be able to do without until your debts are repaid. It may seem difficult, but it is not forever. Once the debts are repaid you will find that you are able to go back to buying these things again.

Cutting back on spending is not easy but if you keep reminding yourself of why you are doing it then you will feel more motivated. Write down your goal on a piece of paper and put it somewhere prominent so that you keep remembering why you are doing this and that it will be worth it.

Earn more money

Another way that can help you is to earn more money. This may seem tricky but there are lots of ways to generate a few extra bucks that will all add up and help you to repay your debts more quickly. If you work, then you may be able to increase your hours in order to get more money coming in, but it is not always that easy. You may also be able to ask for a pay rise, but this will again depend on what you do. You may want to look into applying for a better paid job or see if you can do a second job to earn extra. You might be able to pick up some online work that will help, do some freelancing or even start a business to get some money coming in. If you want a lump sum of money then you could have a yard sale and make some money from items that you own but no longer want or need or you could sell them online if you think you will raise more that way. It is good to keep thinking of ways that you could potentially make more money as this could help you to pay the debts off much more quickly and even if you are just making small amounts, they will all add up.