I think the first thing to do is to be honest with yourself. How much in debt are you, how much money do you have and how much can you spend? And this means being really honest with yourself not trying to hide the fact that money management is a problem.
1. WORK OUT REPAYMENTS
How much can you afford to repay? This is dependent on one important factor: budgeting
Be realistic. The important thing about spending less is setting yourself a budget. Know what you need to spend and then stick to it. It doesn’t mean you have to go without everything, but it means you need to prioritise.
It’s not necessarily going to be easy but it’s important to get a control over your spending habits.
Then work out how much you have left. It’s often worth putting all of this into paying off one debt at a time. Rather than trying to pay a small amount of different debts each month and the interest racking up quicker than you can keep up with the repayments, put all your money into paying off the debt with the largest interest first. This way, you’ll cut down on your largest debt interest.
Let your debtors know what’s going on. Most will be sympathetic and help work out a repayment plan. If you don’t tell them about your financial problems, they’ll never be able to help out. You never know, they may even give you a repayment break.
3. TALK TO AN ADVISOR
There’s plenty of free advice around for debt management and trained professionals will be able to give help and advice either over the phone or face-to-face. These people know what they’re talking about and can help resolve any problems around money management.
Don’t wait until you get a summons or the final reminders start piling up in the bin. Get information and advice to sort the problem out it won’t go away on its own.
4. CASH VS CREDIT CARDS
To make sure you can’t use your credit cards and go over budget, you should cut them up. Instead, get some cash and keep it for your weekly budget. This way, you only spend what you have and aren’t tempted to rack up big debts.
And keep a record of what you’re spending so you know exactly where your money’s going, right down to the last penny or cent.
One of the best tips I know to help stick to a budget is to spend cash rather than use credit cards. If you can go to the cashpoint or bank each week and withdraw your weekly allowance then you’ll know exactly how much money you’ve got available and when it’s gone you’ll know there’s no more.
This has a much greater impact than using credit cards or cheques (checks) and trying to keep a running total. If you have the money in your pocket, it’s there to spend; if not, you can’t spend it.
5. LOOK AFTER WHAT YOU HAVE
It’s a simple thing but can save money. Recycle, reuse and reduce. Some places give money for taking old bottles or cans back for recycling. Take advantage of these and pick up the extras while improving the environment.
Also start to reuse what you have. Instead of throwing things away, see if you have another use for them and try to use everything you can.
Finally, reduce what you are using and spend your money wisely.
Don’t give up however hard it is and soon you’ll find you have control over your finances and can start saving money instead.
(1) http://www.helium.com/items/884394-think-first-thing -honest