The right Debt Management strategy can help you get out, and stay out of debt.

Never before in history have so many people been in debt. As you might already know, managing your money is not so easy these days due to the easy availability of credit.

But, the good news is - if you have too much debt and need financial assistance, plenty of help is available. Possibly, your problem may be out of your control because of illness, a divorce, the loss of a job, or other things ... You may not be able to pay your monthly payments for a loan, a lease, a mortgage or credit cards and unquestionably it is driving you crazy, just like everyone else. However, more often than not, debt is caused by not managing our money as good as we would like, and credit card interest payments have gotten out of control.

So then what makes overcoming credit card debt so hard ? Unfortunately, many seem to be losing the battle of the credit-card balance. Consider that 60% of all credit-card holders carry a balance, according to an industry tracker. And among families that have at least one credit card, the average balance is a staggering £8,367. Ten years ago it was £3,332. People are out of control, and usually they don't know why. According to a recent survey of 1,500 consumers, a whopping 71% said debt is making their home life unhappy. Part of the problem is that the credit-card companies have made it easier than ever to carry a balance. People would prefer to make the minimum payment each month and imagine that everything is okay. It's almost as though we have all been brain washed into thinking that the huge balances we carry on our credit cards is not owed by us at all and that somehow, some way, it will all take care of itself ... eventually ! If you are having financial problems in your life, don't despair ! You're not alone. It's a world wide dilemma, but, there is hope, so don't worry ! There is a way out of the pile of bills you may be facing. What you need is knowledge on how to determine what the exact problem is with your finances and then, what is the best way out. Don't assume you know why you're having money problems. Until you analyze what is going on in specifics, you'll never be free. We will give you very valuable information here to help you. But, it is up to you to do the work. We can't do that for you.

Being in debt can have some emotional or psychological connections. Sometimes people spend money because it makes them feel better or because they just can't seem to pass up a good deal. Because of this, it is often a good idea to talk to a financial counselor, an expert in this field.

Things not going very good ? Do you need help now ?

Let a Consumer Credit counselling Agency deal with your creditors and design a way to pay off your debts faster.

Steps to Controlling Your Finances ...

1. Recognize a problem exists

Sounds easy enough, right ? However, most people never admit to themselves, let alone anyone else, that they have a financial problem ... until, of course, it has elevated into an unmanageable dilemma. Here are some warning signs :

You're unable to make the minimum payment on one or more credit cards.

You are receiving phone calls or letters from your creditors asking you to pay an amount due.

You're using credit to pay for necessities (food, mortgage, car, personal care products, clothing).

• You are constantly thinking about your lack of money and the bills you have to pay.

You may be depressed, because of worrying too much.
Do you have any bad habits, like eating out too much, drinking or smoking excessively, gambling your money away, buying lottery tickets all the time, etc.
Do you get angry with your spouse, co-workers, or friends, at even the slightest little disagreement.
You have trouble sleeping at night.

 2. Figure out your spending habits

In most cases, if you ask someone to write down what they spend in each category of their budget, they do not know for sure what the numbers are. So, in the first step to controlling your financial future carry a pad and pencil and write down everything you spend to the penny every day, for one month. The reason for this is to determine your exact expenditures each month. You must know this. This step should be repeated at least once a year, since your needs and wants will change, and so will your budget.

3. Get the most for your money

Get a current account at a bank with the lowest fees associated with it. Every bank will likely have many types of current accounts, so, go over this with your banker first, before opening an account.

• Also, avoid opening a savings account if you intend to make more than one or two withdrawals a month. Again, check out the savings account fees first. A savings account is normally good for money set aside for emergencies and unexpected expenses, but, other than that, it is not such a great idea.

In addition, it is not a good idea to get a convenience card with the savings account. That will only tempt you to use an ATM machine to get funds out whenever you want, and that will not help you.

What about car insurance ?

How many insurance companies did you approach for quotes on your car insurance ? Do your best to get at least 4 or 5 quotes. Maybe your employer has a special deal with an insurance company for employees. You may be able to save only 10 or 20 pounds a month, but, that's £120.00 to £240.00 a year !

Can you save money here ? Yes, you can. You may find coupons in newspapers you can use, but, more important than that :

Don't go to the grocery store when you're hungry ... you'll spend more for sure !

Make a grocery list out first and the approximate costs, and buy only those items.

Based on whatever your monthly household budget is, spend only what you can afford on groceries.

Use only cash. Never pay for groceries using a credit card or debit card because you will likely overspend.

The main point in this section is to be careful where you spend money and how much you spend. It has nothing to do with being cheap or going without. Don't believe that lie ! Remember, this is your hard earned money we are talking about here. A couple of painless changes to your lifestyle will save you a great deal over a one year period.

 

4. Getting Organized

If you intend to manage your money based on your written budget and your willpower, that's up to you. However, some professionals advise using the Envelope System, at least until your debts are paid off. (a). Use 4 envelopes for each category of expense. On each envelope mark Week 1, Week 2, Week 3 and Week 4. (b). For example, you would have 4 envelopes for Food, for Gas, for Gifts, and so on. Some of your expenses are paid by cheque or automatic debit to your bank account (eg. car payment, cable, mortgage or rent payment, insurance, etc.), so, we're not talking about those here. What we're talking about is expenses you should pay with cash (don't use credit) you have left over after your other payments. (c). Put the cash you have allotted for each expense in the envelopes. Say you want £100.00 per month for gas. Well, put £25.00 in each of the four Gas envelopes. So, when you need to pay for gas, this is where you get your money. If you need more for gas, you'll have to borrow from another envelope. At any rate, you only use the money in those envelopes and never go to your bank account or credit card to pay for things.

This system will help you gain control of your budget.

Just make sure you do not tell anyone about the money in these envelopes. If you're afraid that someone might steal this money, then don't use this system. Just use paper records and your bank account. It's only a suggestion, not an absolute requirement, to get on track with your finances.

5. If you feel that your finances are out of control ...

Contact your Creditors (Credit Card companies, Banks, Loan companies etc.).

Phone, Fax, or write them a letter telling them you're having temporary financial problems and ask if they can postpone some payments or reduce the interest charges. It's always better to inform them, before they start calling you.

Contact a Loan Officer at Your Bank.

• They may give you a consolidation loan to provide you with paying only one monthly amount.

Credit Counselling Services.

• These are normally non-profit organizations created by Banks and the Credit Card companies to provide you with advice. They can also arrange a Debt Payment Management Plan with your creditors, where you will make one monthly payment to them and they pay your creditors. In this case, you normally pay back 100% of the principal amount, with no interest, over a period of 3 to 5 years. You will also have to give them all of your credit cards.
• It's always best to visit each one of these organizations first, before making any decision