When times are hard, like they are for many in this recession, it can be difficult to imagine how you could even consider paying back your loans and getting out of debt. However, there might be things that you can do even if you feel that you have no spare money.

–        Stop getting in to more debt – it is very important to start off by not building up even more debts. Consider the ways that you get in to debt, whether they are credit cards, overdrafts, loans of whatever. You need to stop using these methods of paying for things so that you do not continue to get in to debt. It is no good paying off your overdraft if you build up debt on your credit card and so you need to firstly manage just using your income and nothing more.

–        Assess your debts – this can be the scariest part of the process as you have to find out exactly how many debts you have. This includes everything from loans to mortgages, money you owe friends to credit cards. Look it all up and write it all down. You may find that it is not as bad as you imagined or that it is worse. However, doing it, is the first step in being able to pay back what you owe and have that freedom that you will have dreamt off.

–        Spend less money – telling someone to spend less money could seem silly. Many people feel that there is not a way that they can reduce the amount of money that they are spending. However, it is worth considering whether you really are spending the minimum amount. Consider every purchase that you make and whether it is something that you really need at the moment. You may be able to delay that purchase until you are clear of debt or you may not really need it at all.

–        Repay the dearest loan – it can be best to take  a look at the loans that you have and pay back the one that is costing you the most money, first. If you pay any spare money that you have in to that loan, then the costs of it will go down. It will become easier and easier to pay more back because you will be paying out less in the cost of it and eventually you will pay it all back and be able to work on the next one.

–        Repay the smallest loan – some people find that they feel more motivated when they pay back a loan in full and therefore target the smallest loan first. This is a more expensive way to pay back money, but it can be well worth it, if you feel that it will give you the motivation that you need.

–        Reward Yourself – it is important to make sure that you reward yourself every so often. Being as frugal as you can and paying back loans, can be very rewarding for some people. However, if you are used to spending lots of money and never thinking about how much you are spending, you may find it very difficult to get used to spending less. Therefore it can be worth treating yourself every so often to something that you have cut back on but really miss. This might be a coffee out, a take-away or a new piece of clothing. However, do keep it as a treat as you will appreciate it more and you will not overspend and get out of your new habits of paying off debt.