For the purpose of our response, we are going to assume that you have debt, but your credit is still acceptable.
If you are to the point of being delinquent, you are best served to talk to a debt counselor to decide if you need to file for bankruptcy or need to take other measures.
However, if you are just in debt and looking to clear it up so you can get a mortgage, we can definitely give you some ideas to help!
First and foremost, you need to gather all of your bills and establish a new budget. Sit down and write down every penny of income that you have.
If you have your bills for the previous month, including all the money you spent going out and such, gather them and get them organized. If not, take the time to record every penny you spend over the next month or so.
Once you know how much money is coming in and where it is all going, it is time to set your priorities in regard to spending.
Go over your monthly spending and decide what a MUST is and what is considered a luxury that can be eliminated from the budget. Shave as many costs as you can using the inspiration of getting a new mortgage as the light at the end of the tunnel.
Now that you have the bills set, it is time to organize them in order to pay them off quicker. For instance, organize your credit cards by interest rates and balance owed.
You should make an effort to pay off the cards with the highest interest rate first, as they are the ones costing you the most money.
If you have £1,000 pounds per month that you were paying to six different cards, but only paying £100 per month to that card, you are probably doing nothing more than paying interest.
Instead, pay £100 pounds to each card, more if the minimum balance requires it, and then use the rest of the money to pay down the balance of the card with the highest interest rate.
Once the first card is paid off, that extra money immediately goes towards paying off the next card.
You could also pay the cards by balance. Pay off the card with the smallest balance first in order to eliminate a bill, and then do the same in regard to moving that payment to the next card on the list.
Doing this allows you to eliminate bills and make your payments more effective. It may take a few years, but eventually you will begin to clear off your debt and be able to secure a mortgage.
The challenge, of course, is to avoid the temptation of running up the cards again and finding yourself in the very same predicament.
