Here’s a guest post written by Andreas Nicolaides, a personal finance author for the UK based

We are all faced with debt in our lives at one time or another, however, managing and controlling your debts is
an entirely different matter. Learning how to control your debts is a big learning curve, we all like to control our
finances in our own ways. My aim from this article is to detail what I believe is an effective way to getting started,
and hopefully I can help one or two of you as a result.

Face up to your debts

This first step of dealing with your debts is to acknowledge them, many people ignore the fact that they have a few maxed out credit cards, and they just let them sit in the background. Acknowledging your level of debt is the first step to learning how to effectively control it.

Analyse your debt

The first thing here is to analyse how much debt you actually have; I know this is a daunting prospect but knowing an approximate figure is the only way that you can set yourself a realistic long term goal. First grab yourself a pen and a piece of paper and note down all of your debts and how much you repay per month and per year. With this section try and be as thorough and as honest as possible.

Once you have a total debt figure you believe to be correct you can start by sorting your debts in order of importance. The debts you should be looking to pay off first should be the high interest ones; these should be attacked aggressively whenever you have some spare cash.

Cut down on your spending

Most people seem to enter the debt world by basically spending too much money, this section may be obvious for most of us but some people really struggle to spend less than they normally do, it’s more of a habit thing than anything else.

Cutting down on your spending should coincide with your financial plan; here are a few tips to get you started:

  • Compare credit cards – Using a credit card comparison site you could quickly and easily save some money, you could compare how much interest you are paying from month to month and find a cheaper alternative card for you to use. Compare your bills – Using a price comparison site you can compare how much you are paying on your bills compared to other providers, don’t be afraid to switch if you find a provider offering the same service for cheaper
  • Shop with a list – Taking a shopping list with you when you go shopping can help you save money by not buying unnecessary items, the key here though is to ensure you stick to the list, which can take a lot of will power
  • Savings Calculator – Using a savings interest calculator can help you if you have a savings account, or if you are planning to open one to help you pay your debt. If you have any spare cash, you can identify how much interest you could possibly gain by using a savings account, and then use it to pay off some debt at a later date. I would however only advise doing this if your debts are not severe.
  • Have a plan– Once you have analysed your debt and you have identified ways where you can save money, the next step is to set yourself an objective. It should be realistic and something that is measurable. You could for example aim to reduce your debt by $1000 over the next year; you need to set an aim that this realistic for you.

Remember that when trying to reduce your level of debt you will be hit by stumbling blocks, it’s all a big learning
curve and the main thing here is not to give up, in the long term you will see the benefits.

Y&’s Thoughts: These are great concrete suggestions to analyze your debt and cut down on spending.  I think it really helps to make a shopping list and stick to it.  I just came back from shopping last night and stuck to my list and was “over budget” by only $5.  I made sure I added up everything that was on sale in the flyer and ensured that I didn’t go over this time.  Also, facing up to your debts is huge, in my opinion.  The first step to ANY behaviour change is to acknowledge that the behaviour needs to be changed in the first place!

Readers, what do you think? Any other suggestions?

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