by John Hewitt

Created on: April 23, 2009   Last Updated: April 24, 2009

Debt is a fact of life and no matter how careful you, are at some point you will probably encounter debt. This may be through choice, for example buying a car or acquiring a mortgage, or it may be unavoidable as you use your overdraft facility or credit cards during those leaner times. When faced with debt the first thing that you must do is to own up to it. What this means is being honest with yourself, acknowledging to yourself that you have debt and then create an action plan. The worst thing you can do is to ignore the fact and hope that it will go away. That method just will not work.

Essentially there are two things that you can do. Firstly, you can increase your income and secondly you can decrease your spending. This all sounds obvious and too simple; yet that really is all that there is to it. To increase your income involves getting a second job of some kind, perhaps working from home. However, decreasing your spending is a form of wealth increase in itself.

Budgeting is the first step. Instead of drawing out money whenever you wish it is far better to draw out, say on a Monday, an amount that you have budgeted for the week. This will really make you value that money a lot more because you know that you need to make it last. Take a look at what you spend your money on. Do you really need that contract phone or could you go to pay-as-you-go and budget your calling? How many new clothes do you need and how about cooking your favourite takeaway yourself? It will probably be healthier for you too.

As you can see, there are many ways that your expenses can be reduced and you will often find that after a while you will no longer miss that desire to spend.

Now, steps for dealing with your debt are numerous. you can consolidate all your debts into one central debt that will reduce your monthly outgoings. However, that could be expensive if the charges for that end up costing you more in the long run. You should always seek independent advice before embarking on this course of action and always read the fine print.

After your budget has been decided you can contact your creditors and arrange a lower payment plan in keeping with the amount that you can afford. Creditors are usually happy to help in this way. They would much rather have a smaller regular payment than no payment at all. Debt management companies are also available to act on your behalf and will contact your creditors to arrange a more suitable payment plan. Most will charge a fee though. Get in touch with your local free advice organisation. In the United Kingdom there is a National Debtline which offers free debt management plans. There are also debt charities that can offer advice and support.

Debt is nothing to be ashamed of. It has become a part of modern life. How you deal with it though is vital. Above all do not ignore your debt and start acting on it today. Time will pass whether you act or not, yet if you start today and create an action plan then you will be well on the road to financial health.

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