Getting into debt is very easy to do and almost everyone has at least some debt. Managing your debt is important as your debt can increase very quickly and become overwhelming at times. If you want to take control of your debt and help yourself get back on track financially then here are some tips that will be helpful.

Work out how much you really owe

Take the time to add up all your account balances and work out exactly how much you really owe. This can be a scary thing to do but it is important to know exactly how far in debt you really are. It is also a good time to reflect on your spending habits so you know how you got to this figure.

Group your debts

Find out which of your debts have the highest interest rates and fees and put them in order, most expensive first and least expensive last. The goal is to pay off the debts that are the most expensive first. Make sure you include the interest rate and all other fees when working this out.

Lots of expensive debt?

If you find that most of your debt has high interest rates and fees then it is a good idea to talk to your bank. Your bank may be able to help you by giving you a loan to pay off this debt. The loan will have a lower interest rate which will save you money.

Work out a budget

Calculate how much it costs to run your household each month, eg rent, power, phone, food, etc. If you can see an area where you can save some money while doing this then thats great. Deduct this amount from your monthly income and this will give you the amount that you can use to repay your debts.

Pay the most expensive debt first

Once you have you list of most expensive to least expensive debts, you should focus on paying off the most expensive debt first. You can do this by paying the minimum payments required on the other debts and paying more on the most expensive debt. Once the most expensive debt is paid off then move to the next one on the list.

Stop using your credit card

When making purchases use only cash or your debit card. Its important to only spend money that you have now and not go deeper into debt. If you do keep using your credit card then it will be almost impossible to get out of debt.

Be patient

You aren’t going to be able to pay your debt off overnight but you will be able to pay it off. Keep yourself motivated and remember that your are taking control of your finances. It will feel good to be debt free.