10 Top Tips for getting out of the Red and into the Black  

You're under thirty and you're in debt. You keep hearing on the news about rising house prices and you know that you'll never be able to afford one yourself, because you can't break even financially, let alone think about putting a deposit together. Admittedly, you've had a few good nights out and you've probably got a nice stereo and the latest mobile phone, but you know that you're paying for them. You know that you can't afford these things, yet somehow you feel as though you can't live without them either. You also know that it's not your fault. You live in a play today, pay tomorrow society where you feel it's your right to have everything that you want right now - and there are plenty of people willing to lend you the money to get those things, so why not? The trouble is that it is not sustainable to have more money going out than you have coming in indefinitely with debts mounting that you cannot afford to pay, and if you're reading this article it's probably because you know this. Here are ten tips to help you to reduce your mountain of debt and get you life financially back on track.

1. Transfer all of your short term credit card and loan debts onto interest free credit cards. This may sound like an obvious thing to do, but people don't seem to take the time and effort to do it. Many of the credit card companies are getting wise to people moving debt onto their product only for the duration of the interest free period and as a result charge 2% of the balance transfer amount when the transaction first takes place. However, this is a much lower price than you will be paying on your current card and for that 2% you can get 9 to 12 months interest free credit on your new card. Once the interest free period is getting close to expiring, don't forget to transfer the balance onto a new card offering a similar deal. By following this simple rule, even if you only pay off the minimum amount each month you will always be reducing your balance. Sites such as http://www.moneysupermarket.com/cards/credit_card.asp can help you through this process and are a quick and easy source to the best deals out there at the moment.

2. Cut up all of your credit and store cards. This might sound contradictory when compared to point one, but if you think about it, you don't need the actual card to have the 0% offer. If you cut all of your cards up you will lose the convenience of being able to buy things on impulse, and indeed will have to be able to physically get your hands on cash to buy things. Having to part with cash will make you think twice about your purchases and hopefully help you to identify what items are essential and what items are luxury items. By not adding to your credit card bill with spending on a monthly basis, you will actually have the satisfaction of seeing the amount that you owe decreasing.

3. Switch your home energy suppliers. This is becoming easier and easier to do, so there is no excuse for not doing it. Water, electricity and gas are completely undifferentiated products when you receive them, so why would you want to pay anything other than the lowest possible price. Visit sites such as www.simplyswitch.com or www.uswitch.com where you sill find more information on how to go through this process, and you can even make the necessary changes online.

4. Sell things that you don't need. One of the reasons why you've got so much debt on your credit card and no free cash is because you buy too many things that you don't need. Face it - you're impulsive! You don't need to get too hung up on this - you're not the only one. The good news is that many of the items that you may have bought but no longer want or need still have some value to somebody. Why not list your items on an auction website such as e-bay and try to recoup as much money as you can. Alternatively, the old fashioned way is to go to a car boot sale and sell your stuff there. Either way, you're quids in. You might also consider looking for other items to sell. I'll bet for example that you'll still have toys and games kicking around from when you were a child. If you don't know where they are, the answer is the same for everybody - they're in the loft or garage at your parents house. Some vintage toys, especially if they're in good condition and have their original packaging are actually worth quote a lot of money - you might be pleasantly surprised. Now, the trick here is not to consider this a windfall to go out and spend on other items that you don't need (just remember how much less you got for the things that you've just sold than they cost you in the first place!), but to invest it in yourself. Yes - you've guessed it - you need to pay it off of that credit card balance. This will have the effect of reducing your minimum payment each month, freeing up more spare money for you, or, if you keep your payments the same will help you to pay the balance off more quickly.

You may have noticed that the top four points require very little effort and practically no personal sacrifice and your already going to be better off. In fact, as you're reading this article why not do all four points online whilst you're still sat at your computer?

5. Mobile Phones. Everybody has got them these days and the network providers are always trying to entice you to stay with them by offering you sexy new phones once your contract has expired. It all sounds good to you because you're getting a £300 for £50 per month over 18 months and you get 100 free minutes every month. But...because your contract has expired you now own that sexy new phone from 12 or 18 months ago - do you really need the sexy new one? Why not switch to pay as you go? You can spend a lot of time on the phone for the £50 contract fee and having to keep topping up is likely to save you money as you'll find ways of doing without the phone a lot of the time. Better still, why not use skype technology to talk to your friends online for free and facebook to replace your need to constantly text message your friends. I think that you could easily cut your mobile phone costs in half this way without any hardship. The only downside is that you have to wait for your contract to expire before you can take this option up.

6. Transport. We all need to get there, and this article is not about getting people to give up their cars or anything that they feel they might need. But, what if, instead of driving a mile to the shops three times per week, you walked that mile? Instead of getting taxis home at night, you get on the bus or walk (subject to distance and safety)? You might need your car to get to work. That's fine, but how about car sharing? Not only will you save money by taking it in turns to drive you will also be helping to reduce global warming and road congestion so you can feel good about yourself at the same time. Assuming that you currently do average mileage (around 12,000miles per year) and that you car will do 35 miles to the gallon, at current fuel costs of around £0.95 per litre you will spend £1480 per year on fuel alone (which is around £2200 per year in before tax earnings). If you could reduce your mileage by 20%, no only would you reduce wear and tear and depreciation on your vehicle, you would also save around £300 per year on fuel - just for walking to the shops and sharing lifts to work.

7. Nights out. If you're still reading this, you might be forgiven for thinking that everything above is easy. I hope you are thinking that, because with a little bit of effort you can achieve all of these things. But how do you reduce the cost of nights out. After all, you're young and you want to have a social life. The easiest way is to cut down on the number of nights out that you have. Why not make a promise to yourself to stay in for one weekend every month, or cut out those Tuesday night pints down at the local pub? You could even go down to the local pub and instead of drinking your usual, opt for tap water or orange cordial. You could easily rack up savings of quite a few pounds for very little effort.

8. Clothing and CD's. Many impulse purchases that rack up on credit card bills revolve around the amount spent on clothing and CD's every month. I've seen television programmes where people are introduced to cheaper stores to buy their clothes from, or are challenged to spend only £100 per month instead of £200. I've never agreed with this principal. This is the first time when you have to be really honest with yourself. If you have built up credit and store card debt from buying clothes and CDs every month, I'd be willing to bet that you have loads of clothes and CDs at home. So stop buying them. Your budget is now zero. Why not try wearing some of the clothes that you have and listening to some of the CDs. Those that you don't wear or don't listen too because they were impulsive buys even by your standards go back and read point 4.

9. Share accommodation. This is a real lifestyle change. We've already looked at reducing household bills by changing suppliers. What about reducing them further by sharing them with somebody else, and getting somebody to help with the rent or mortgage? If you have an monthly financial deficit and you are lining in either your own home or a rented home that has a spare room then you could make a monthly swing of several hundred pounds by letting that room to a friend. If you don't know anybody who wants to share with you, there are house share websites such as Abodewithme where you can sign up to meet new housemates who are looking for accommodation in your area. You don't have to take just anybody - you can read the profiles and really get to know potential new housemates before they move in. This is a potential gold mine for you if you have a spare room, and what is even better about this is that the government allows you to earn up to £4,250 per year for letting a furnished room in your home, tax free. This doesn't include any contribution that your lodger makes towards bills, but £4,250 tax free is the equivalent to about a £6,500 per year before tax pay increase which for most of us is just a pipedream!

10. Earn more money. I know that you already know that if you only earned more money, you wouldn't be in the financial mess that you are. You're not actually right though, because without changing your spending habits, you will only learn to spend more if you have more to spend. This is a fact of life that the more you earn, the more you spend. I don't know a way around this. However, in your financial position, you have to look at this option. It may nor be possible to get a pay increase where you currently work, but the first thing that you need to do is ask. If the answer is no, your next question is 'what can I do here to earn more money'. You employer might offer some overtime, or discuss training options so that you can progress in the company, or they might just be impressed with your attitude because of the way that you have asked the question and give you that raise. If it's not possible to get a raise in your current position, maybe you need to spend some time putting your CV together and looking for a better job. Even if you like it where you are and let's face it, happiness is important at work, you may be happy because you are within your comfort zone, and in your financial position you can't afford to stay in your comfort zone. One of my favourite ideas is to try to get a job working in you local pub. This may not be the best paid extra work, but if you could work in the pub you would still be socialising in the evenings, but instead of spending money you would be earning it.

So, there's my 10 top tips to get yourself out of the red and into the black. All it needs is a little bet of commitment, a small dose of dedication and a whole bucket full of realism. But follow these points and not only will your financial problems start to decrease but you will also be learning new habits that will serve you for the rest of your life. Good luck!

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