Manage and Tackle Your Debts

by guest on September 28, 2010

in Budgeting,Debt Management

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This article was written by Andreas Nicolaides a finance and debt management author for

Most of us will face the dreaded word debt at one time or another; whether it’s when we’re buying a new house or a new car, it’s just a part of life. However, successful debt management is a totally different story.

I can’t stress enough how important managing your debts (no matter how big or small) actually is, if you don’t monitor your expenses or who you owe money to, then how do you know how much debt you actually have?

Monitoring your expenses

Spending more than you earn is a sure fire way to seeing your debts spiraling out of control and this can easily happen if you don’t monitor your expenses. To start monitoring your expenses you first need to know what money leaves your account and where it goes. A quick way you can get the basic idea of where you’re spending your money, is by looking at your bank statements.

To monitor my expenses the easiest way I found is by using a spreadsheet, but just to get started grab a pen and a piece of paper and note down any regular debt repayments. An example of a regular payment could be your phone bill or a credit card payment.

Write down all of your expenses and add up to a total figure, I like to do this on a monthly and a yearly basis to find out exactly how much your debt repayments are. You have to know what all of your obligations are in order to properly begin managing money.

Once you know what your repayment figures are, it’s time to find out your total debt figure. To do this you need to note down the information of all your creditors; these are all the people who you owe money to. I know this is a very daunting prospect but once you have your total debt figure, you then have something to work towards.

Set yourself debt targets

Once you have your debt figure it’s time to set yourself some targets. Targets help to keep you motivated and they give you something to financially aim towards. You should set for yourself a realistic target that is achievable – there’s nothing more demoralising than looking at a massive amount of debt and thinking that you can wipe it all out within a week, then facing the hard fact is that it’s going to take time.

Once you have set a realistic target for yourself, you should look at setting yourself short and long-term goals. A short term goal could be to wipe out one of your credit cards, where a long term goal could be to wipe out all of your credit card debt by the end of the year.

What can you do to reduce your level of debt?

To reduce your level of debt just best way is to reduce your debt repayments and hence your expenditure, here’s a few quick tips to help you reduce your debt figure:

Save money wherever you can! – Look at ways where you save money day to day, check your regular bills and use price comparison websites to see if you can save money there. Also try and reduce your spending on food by trying to adopt a more frugal approach – then use the savings to pay down debt.

  • Interest heavy debt – This is the sort of debt that you should try and tackle aggressively. Whenever you have put some money aside to reduce your debts, tackle these debts first
  • Debt consolidation – This should only be an option if you feel your level of debt is uncontrollable. A debt consolidation loan allows you to take out a loan to consolidate (hence the name) all of your other debts. The upside of this is one manageable monthly re-payment and no creditors chasing you for cash. The downside is that the loans terms could be set over a long period of time, so you may be paying it back for the foreseeable future
  • Reduce fuel costs – Is your place of work close enough to bike to? If so, then why not try it? You can keep fit, help the environment and save money all at the same time

These are just a few tips off the top of my head, there are plenty of ways that you can reduce your expenditure and save money, grab a pen and piece of paper (again) and brainstorm all of your ideas, then work out which ways work best for you.

Don’t give in!

Debt is one of those things that won’t just go away overnight; however, making little progress often does make a big difference. If you tackle your debts as aggressively as you can and you don’t give in then you will reap the rewards in the long term. I’m still faced with debt from my days as a student and I’m still slowly paying these debts back, however, I’ve set myself a personal goal to wipe out these debts over the next few years, perseverance and determination are key.

photo credit: alancleaver_2000

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{ 6 comments… read them below or add one }

1 Lisa @ Cents To Save

I am not big on spreadsheets… BUT… I do use a legal size yellow pad( actually it is pink) to monitor what my expenses are. I write down my bills and keep track of what is going out and what is coming in. I also look for areas to cut back on. I just recently switched cable companies… and will save about 50 dollars a month.


2 Khaleef Crumbley

I think that’s great! It doesn’t have to be on a spreadsheet, just somewhere that will actually cause you to take action if you find something wrong!

Thanks for the comment!


3 Richard Hurt

I agree with your comment on attacking “interest heavy debt first”. So many tout the snowball approach of attacking small debt first and then working up from there. But I believe attacking the high interest debt first has more impact on saving money and debt reduction. Thanks for the insight.


4 Khaleef Crumbley

I thought he made a good point as well. Honestly, I had never heard of anyone pushing the idea of paying the smallest debt first until I started reading personal finance blogs!

I will always advise someone to pay off the highest interest card first because it makes the most financial and mathematical sense!

Thanks for stopping by!


5 Glass Is Half

A business analogy that is pretty apt is you cannot fix what you cannot measure. I think you’ve hit the same nail on the head here too as if you don’t know where your money is going then you are never going to be able to get out of that debt prison that you’ve dug for yourself. Its absolutely essential that you track your expenses (& incomes) and see where your money is being spent … more often than not, some small simple changes are all that’s required to change your financial situation.


6 Khaleef Crumbley

I agree that this same concept applies in business as well. I know of many people who refuse to do a budget, or examine their expenses because they are afraid to face the reality of their negative decisions!


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