by Bridget Webber

Created on: March 08, 2009   Last Updated: May 01, 2009

Much of the population is currently in debt. To add to this their debts are increasing because many of them don't know how to manage debt effectively. If this sounds like you, then learning some cool money tricks can help you to pay off your debt sooner and prevent you from adding to it.

Credit Cards

Folks in debt tend to view credit cards in one of two ways. Either they bury their head in the sand about how they are accumulating debt and carry on using their card as though it can provide them with part of their income, or they see credit cards as big bad wolves and go out of their way to avoid them at all costs.

The truth about these cards though, is that they can be used for the customers benefit, rather than becoming a thorn in their side or a temptation to spend indulgently. There are two major ways that a person in debt can use credit cards for their own benefit.

Debt Consolidation

The first way is to stop using several cards which they need to pay off a certain amount on each month and to opt for debt consolidation. This is where they choose to have all debt transferred onto one card. This means that they are better able to keep an eye on what they are doing, and don't have to cope with taking care of more than one card.

Balance Transfer Card

When you switch to one card research first and make sure that your balance transfer card offers you a low rate, or preferably 0% for a decent amount of time so that you can gradually pay back your debt.

The Virgin Money credit card for example, offers 0% balance transfer and this applies for fifteen months. After this time period a fee is applied. If you have such a card and haven't managed to pay off your debt then just 'before' this time period runs out attempt to negotiate with your provider for extra time.

They may value you as a customer and extend your free period. If they dont, be prepared to change providers and find another 0% balance transfer card that gives you more time to pay off your debt.

Never use your transfer card to purchase goods while you are paying off your debt. See the card as being there for helping you rid yourself of debt, rather than for gaining more. If you must use a credit card for purchases then get a different one from another provider.

Budget

Sit down with a calculator and all of your bills and bank statements and work out exactly how much money you need to earn each week to cover all debts. This includes money that you owe to lenders via repayment through your transfer card, household bills such as food and electricity, and any extra costs such as running your car or school fees.

See exactly where your money has been going. If it turns out that you are earning enough to cover debts but haven't been doing so then have you been over spending? Perhaps you treat yourself to something new when ever you have had a hard day? Or maybe you treat your friends to wine while you are out or go to expensive places?

If you have been overspending then now is the time to take charge of your financial situation. Change your spending habits and work out a plan that includes exactly how much you can sensibly spend on social activities and material goods, and which gives you strict guidelines about when you will have paid off your debts and how to do so.

The truth about debt is that you have to grab hold of it by the short and curlies and not let it run off out of control. The longer you leave it and deny that it exists the bigger it becomes. However, if you face it head on you become its master and you will discover that you have the ability to make it vanish after applying diligence and financial know how.

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