Stop Debt Controlling Your Life

It is when you decide to take control of your debt that it will stop controlling you. Unfortunately debt can be a stubborn enemy. This is especially true if credit card debt have gotten unmanageable during the financial downturn. But before you take any drastic action, here are a few simple steps to getting control over your personal finances and clear your debt once and for good.

Know your finances

Clearing debt can be a real battle so you need to be prepared for everything it has to throw at you. From managing your finances to dealing with aggressive creditors you must be ready to deal with your finances and prepare for unforeseen circumstances.

Sadly, too many people simple open their bills, pay the minimum balance and do not evaluate where they are in their debt levels. To know your debt levels you should make it a priority to document and evaluate all your finances. You can use a spreadsheet or a ledger notebook but open every credit card bill and write down the account, the total amount you owe, the interest rate you are paying, how much credit you have remaining before you "max out" the account, the minimum payment you make each month and any other important information. For help creating a financial summary call 0800 781 7878 and ask for a free debt evaluation.

You will be shocked at what you learn. When you see that some of your credit card accounts are charging you 20-30% interest on what you owe, you may feel outraged and used. That's good. Use that anger to resolve to get rid of that credit card debt once and for all. This evaluation will also tell you where your money is going. For a second level of control, document every expense you have including your mortgage, your utilities, your food budget and even entertainment. Often that process will quickly reveal areas of waste that can be used to clear your debt quicker and easier.

If from your financial evaluation it is clear you cannot meet the minimum repayments on your loans or credit cards you should look at setting up a debt management plan or consider speaking to a professional debt advisor.

Stop the debt increasing

Not adding to your debt may seems obvious but many people, once in financial difficult, often decide running up more debt won't make any difference. This is not a good idea. Always remember whatever you borrow you will have to pay back, unless you qualify for an Individual voluntary Arrangement.

To fight credit card debt, you have to stop running it up. That means switching off the credit card system and moving as quickly as possible to a cash based economy. Take a look at your spending patterns and identify where you use your credit cards the most. Now make a plan to stop using them.

This will also call for you to get the whole family involved. It will mean you will have to learn to live on what you bring in only and not depend on credit to live above your means. It might mean that if you don't have the money to buy something, you don't buy it. But that is the kind of lifestyle that will bring your credit habit to a sudden halt and give you the ability to start paying off your debt, month by month, until it is gone.

Most debt problems can be managed using these methods but in some cases filing for bankruptcy is the best option. This is and extreme option and should only be used as a last resort.

The key to winning - discipline

The most effective weapon you will develop in this war against debt is a monthly budget. The detailed evaluation of your spending in step one will help to lay out a budget where you allocate limited funds to groceries, utilities, debt payments and entertainment. It may not sound like fun but it’s a powerful way to get your debt under control and to clear off your credit card accounts. Then when your credit card bills disappear, you can funnel that payment money into other areas of the budget, like a holiday or new car.

For more information on managing your finances or to speak to a professional debt advisor call Debt Response on 0800 781 7878.

Any information you provide will be kept completely confidential.