Are You In Debt?
Debt is very easy to get into and much harder to get out of. Generally, if you are spending more money than you earn, you will quickly fall into debt. Getting into debt often changes your lifestyle for many years.
Debt can range from large sums, such as mortgage debt, to small and simple loans from family or friends. Regardless of the type, all debt is serious should be addressed as quickly as possible. That said, don't despair, debt affects most people at some stage and there are many different ways of dealing with debt.
Recognising your debt
A common habit of people who get into debt is to ignore the problem, in the hope that it will disappear. However, ignoring debt and failing to manage it effectively will only make the problem worse. Debt should be addressed as early as possible, and this means recognising debt before it grows. For instance, being constantly in financial trouble or close to having no money means you should think about finding a solution before full-blown debts develop.
Dealing with debt
Dealing with debt is a matter of prioritising your debts and working out how to pay them off. The earlier you initiate this process, the simpler it will be to become debt free. Serious debt can quickly creep up with a few financial changes such as the loss of a job or the delay of a wage increase. Paying off debt early means that interest charges or penalties for late payment aren't allowed to stack up, potentially increasing the amount of money that you owe.
The first step to successful debt management is to understand your cashflow situation better. Once you know how much money is coming in every month, and how much is going out, you will have a better idea of where you need to save. Plan a budget by looking at your bank statements and organising your debt. Write the figures down until you understand exactly what debts you have, how much is outstanding, and what repayment plans are in place to deal with them. Repaying your debts should be the priority, and this may mean making compromises in other areas of your life.