by Karen Reams

Created on: January 16, 2008

Accept responsibility
Debt is a situation that for one reason or another we choose to get ourselves into. The first step to dealing with debt is to acknowledge that debt. Once acknowledged accept no pity for your situation and give no pity to others in a similar situation. Doing so will just give you the victim mentality which will not give you the strength required to reverse the situation.

Whilst learning to deal with debt you will acquire a whole new set of skills which will stay with you forever so it is not all negative. In fact dealing with a negative situation can be an extremely positive life enhancing experience.

What next?
So, the debt has been acknowledged the next step is to clean up your act. If you are ever going to make sense of a financial mess you need to be organized. Have respect for your money and know exactly where it goes. No more crumpled bills thrown to one side but a neat filing system for all important documents and that includes your household bills and credit card statements. Throwing them to one side will not make them go away.

It is useful to have a checking account solely for the purpose of bill paying. To get a clear picture of your day to day cash flow you need to keep the checking account balanced at all times. You may need to open a new checking account and start afresh rather than trying to make sense of an old one. When opening a new checking account choose a bank where there is no monthly fee, a low required balance to qualify for free checking, free checks, online access and insurance coverage of your deposits.

As bills arrive in the post open them and scan them to make sure that there is nothing amiss and no hidden charges. You then need to file them ready for paying. It is simpler to pay bills altogether once a month. If you have credit cards etc with pay dates all over the month call the customer services of the companies and ask them to move your due date. Some will and some won't but don't worry you are just trying to get a system in place.

Know what you owe
Now stop and make a list of all your debts. Sort them into good debts and bad debts. A good debt is money borrowed to finance an asset such as a mortgage and a bad debt does not finance an asset, credit cards for example.

In fact the biggest reason today that people are in debt is because of misusing credit cards. If this is you don't panic, it is never to late as long as you are committed to the cause. Using credit cards is so easy and does make self-restraint difficult

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