by Olufemi Oyedele

Created on: March 26, 2009   Last Updated: March 30, 2009

You probably have entered into debt because you have been gradually but regularly accumulating expenses, or because you have made a necessary expenditure of late which is not regular but which ate a big part of your available fund, like buying a house, a car, a holiday etc. It may also be caused by unemployment in which case you will need to buy basic essentials including foods. These two scenes cannot be avoided in life as they are part of the three motives for holding money (speculative, transactionary and precautionary). Whether you have accumulated your debt over a regular time, due to small expenses or sudden large expenses, it is necessary you follow the rules below to manage your debt to a bearable level. If you have accumulated debts, how do you plan for unseen contingencies in your life? Remember, life is a pool of risks.

1) Stop incurring more debt

The first principle of debt management is halting any further debt incurement. If you realsie that you have been in debt, and you are sad about it, the first measure is to stpo buying things. Instruct whoever is supplying with grocery or those that have been invoicing you based on your credit line to stop immediately. You cannot come out of debt if you continue to pile more no matter how important the expenditure is. No expenses is necessary when you are in debt or else you will be bankrupt!

2) Review your credit profile

The next measure is for you to review how you have been spending by looking at your previous expenses. You may do this by checking your credit card statement or by checking all your receipts and storming to remember all the unreceipted expenses made and you will come out with a total of your expenses for say, a week, two weeks or a month. From your lists of expenses you will find out that there are two possible divisons you can categorise them into. Thes are necessary and unnecesary expenses. Draw a table and list the expenses that are necessary on one side and those that are unnecessary on the other side. Things like food, clothes, house rent, fuel, drinks, newspapers etc, are necessary while things like beers, chocolate, films, wrist watch etc are secondary. From your list of necessary expenses, you should priotise by considering food first before house rent and fuel for your car if you have one. Check your expenses and found out if you can accommodate the crucial items that are necessary for your living. After accommodating the crucial expenses, you can go for the next on your list of priorities

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