by Lorna Callaghan

Created on: October 12, 2010

Most people has a small amount of debt, which generally is manageable, however debt can very quickly get out of hand and becomes self-generating. It is not the amount of debt that is important rather the ability to manage it and pay it back. There are some basic steps that can be followed to manage money and get out of debt:

>Do some financial housekeeping – there is no point in going into denial, go through all papers, bills, accounts etc and get a clear picture of exactly how much is owed. Only when the actual figure is calculated can the debt be managed;

>Stop spending on non-essentials and ensure all essential payments such as mortgage or rent are covered;

>Draw up a budget, perhaps complete a statement of affairs looking at all incoming finances and all outgoings, this will help identify all non-essential spend that can be stopped;

>Is the debt personal debt or other liability such as business debt, separate the personal debt from the business debt and address both separately, perhaps with an accountant or advisor for the business debt;

>Unburden, if possible, share the responsibility with a partner or loved one, talk about the debt, this will help with recognising the problem and enable the debt to be addressed in a practical manner;

>When all debt has been identified speak to the individual financial institutions concerned such as bank, credit card company, finance company, it might be best to get help with this form a third party such as a debt advice charity;

>Seek advice from a debt advisory charity, but never pay for this information, there are numerous charitable organisations that can help with debt management and financial planning;

>If the debt is small and can be repaid set up a realistic payment plan and advise the respective creditor;

>Take small steps, such as get a second job, or realise some assets, perhaps shares or investments or even insurance policies; and

>Be practical and realistic, set a budget that is manageable and meaningful, allow for everyday living and the occasional treat, when things become forbidden they become more desirable.

Debt can take over an individual’s life but it must be put into perspective and can be managed through small but consistent actions. Recognising the problem and identifying the issues will help to contain and address the problem. There is no debt that cannot be managed and asking for advice and help with make things easier, get the head out of the sand and be honest and actions can be taken to manage money and reduce debt.

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