If you are struggling with debt problems, you are not alone. More and more people are getting into debt every month by spending more than they are earning. It is a simple fact, but one that has caught thousands by surprise. The solution should be an easy one: Stop spending! Unfortunately, for many it isn’t as easy as it sounds. Most people simply aren’t aware of the seriousness of their debt problems. Many couldn’t even tell you what their credit card balance is – they never even open their statements. Does this sound like you?

If so, you are following a path that has been carved out by many others before you. This route only leads to one destination – serious debt problems! Learn from their mistakes before it is too late. Chances are you can still turn your situation around by taking control and making a budget.

Start by opening those credit card statements. Prepare yourself for a shock, it is likely to be a lot more than you expected. Don’t let this dishearten you though, write all your debts down and give yourself a clear picture of your financial situation. This is the first step to gaining control.

Now you need to work out what you have coming in. This can be your salary, any overtime, benefits and any other regular form of income. Write it all down.

The next step is to make a list of all necessary expenditures. Things you NEED, not want. Things you need are a roof over your head, so your mortgage/rent payment should be included. You also need power, heat and running water so include your utility bills. Don’t forget to eat; work out your monthly food expenses. Other necessary expenditures could be nursery fees, transportation costs, insurance policies and council tax payments. Things you don’t need are a new pair of designer shoes, a meal out at a swanky restaurant & tickets to see your favourite band. You do need clothing but be sensible.

Use whatever you have left over to pay off your debts. It is usually recommended to leave 5% for emergencies, so put that away in your savings account. Emergencies can arise at any time (usually when you least expect it) so have a fund for such things to relieve the pressure of unexpected bills.

If possible, leave some to save too. This can be rewarding when you eventually save up for something you want and buy it with money you have, not on your credit card! By knowing exactly what your financial situation is, you can take control and plan, instead of making impulsive purchases.

If you are already too far down that road, you needn’t worry either. The fact that many people have already gone down this road and come out the other end should fill you with confidence. There are solutions available to most debt problems.

Debt Reduction

If you're in over your head with debt or you just want help reducing it on your current budget, consider contacting a debt consolidation company. Many companies offer to take over your payments, so you only make one payment to them and they pay all of your debtors for you. They will always make your payment on time so this is also a great way to not only reduce your debt, but also build your credit score.

jessica@amstn.com