The Big Guide to Becoming Debt Free

I know we've already got a newbie guide:
http://forums.moneysavingexpert.com/showthread.php?t=562271
And there's the MSE page on debts as well:
http://www.moneysavingexpert.com/loans/debt-help-plan
But I thought a more step by step guide would be useful. Any additions or comments from admin and long timers would be great, this is all IME and my experience is relatively short so if it's a load of rubbish we can get rid, was just an idea.

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Welcome! Below is a step by step guide for DFWs. I'll try to keep it short so you don't get bored and wander off, but there's a lot to go through. Accuracy is important so whilst step 1 is the one you're most likely to step over, it's also the one that will trip you up if you start guessing!

So:

Step 1 - Facts and Figures:
Dive into your pile of paperwork, and find all the info you can on your loans and credit cards, bank accounts, overdrafts, etc. Get covered in interest rates and final payment dates and write them all down - pen and paper or spreadsheet, whatever works for you, just have it all in one place so you can refer to it.

Step 2 - Spending Diary:
Start a spending diary if you haven't already. You need to write down everything you spend, whether it's a cup of coffee at work or a new sofa. If you can keep receipts then great but some people find it easier to have a notepad to hand at all times and jot down the figures and dates. Once you get into the swing of it it's quite easy, and you'll be surprised how much you really do spend on coffees at work!
NB: Again this needs to be as accurate as possible, the grocery budget is the one thing people often get WILDLY wrong on their SOA.

Step 3 - SOA:
Fill in an SOA, that's a Statement Of Affairs. It's not just for the lovely people on MSE to rip apart and tell you where you're going wrong, it can be used in Debt Management Plans and all sorts to send out if required. More than anything it's for you so you can see where you're overspending.
Here's the link to follow:
http://www.stoozing.com/calculator/soa.php
It's important at this point to say you HAVE to include yearly costs such as council tax and car maintenance divided by 12. We save £50 a month for car repairs as this covers MOTs and things like new tyres - the stuff we ALL need to pay for. To start with just guess the yearly costs for those things you don't have records for (overestimate where possible) and after 12 months of keeping a spending diary you'll have a very precise figure to use!

Step 4 - Ask for Help:
Now post a new thread in the Debt Free Wannabe forum:
http://forums.moneysavingexpert.com/forumdisplay.php?f=76
asking for help and/or advice from the forumites. Once you've hit the 'calculate' button on the SOA calculator website in step 3, there's a button for 'MSE' which gives you a copy-able block of text that is formatted for the forum, just paste it into your new thread and let the experts loose! This is a scary moment, but it will feel SO much better when you realise that everyone here has been there and seen it, and are now offering help to get you out of that same hole they were in.

Step 5 - Act:
Now follow the advice. Some of it you won't want to listen to, and this will be the deciding factor of whether or not you've truly had your LBM (that's Light Bulb Moment ), the advice WILL get you out of debt the best and quickest way, whether you're willing to sacrifice the life you're used to, or would rather keep it and get out of debt more slowly and painfully is up to you at the end of the day.

Step 6 - Update:
At some point after step 5 you're going to want to redo the SOA with new figures, certainly you'll want to update after a month and after a year, but maybe you want to modify it the following day once you've changed your Sky package and got new life insurance. This will be an ongoing step in the DFW process but as your SOA gets more accurate so does your Debt Free plan and consequently your Debt Free Date!! This is a good feeling whether your SOA shows a red or a green bottom line, as the stress of not knowing is gone and there's no more burying your head in the sand and hoping it all goes away.

Step 7 - The Choice:
Near the bottom of your most recently updated SOA will be the line:
Monthly Budget Summary
And on the bottom line of this section will be one of two things, these are:
Amount left after debt repayments
OR
Amount short for making debt repayments
As you can guess, this is where the choice has been made for you of what the next step is. If you have the former of the 2 lines then you're in the green - WOOHOO! You can pay everything off with what you have, keep saving, keep earning, keep at it! You're on track and you know where the last stop is, so from here you can sit back and read the paper.
If you have the latter of these 2 lines then we have a problem, you are in the red, you are spiralling. Now it's your choice; you can make more changes, cut back more, get more work (see the Up Your Income board) and try to 'go green', or you can go onto the official line: This will mean Debt Management Plans, Individual Voluntary Arrangements, Bankruptcy, whatever is required to get you to where you need to be. If this is the case the people on this board will guide you and tell you the best places to go for help and advice, you're in trouble but by no means out of options, and if you've made it to this step you certainly have the guts/knowledge/willpower to succeed and claim your life back.

Step 8 - The Last Stop:
From step 7 you should now be on one of 2 tracks, and whichever one it is you know where the last stop is. But it's not the end, you can still do more to save money, earn money, save spending on interest, all sorts of things that will speed up the journey. Just know that to get to this point is amazing so keep doing what you're doing, and congratulations!