Debt - The Ostrich and the Owl

There are two types of people when it comes to managing dept, those who act like the ostrich and those who act like the owl. Dept can be worrying, stressful and confusing so people often deal with these feelings by burying their head in the sand. Ignoring your dept situation, not opening bank statements, never checking your bank balance and not monitoring what's going in and out is just hiding problem. If you start to look at your dept problem more like the owl, with eyes wide open and a full 360 degree view of everything going on, you stand a much better chance of taking control of your debt.

Once you have finally admitted you have a debt problem the next step is getting your facts right. It’s vital that you make sure you have all the information you need to accurately record and manage your debt situation. Write down a list of all your creditors (those whom you owe money) and then make a note of how much it is costing you in interest to repay these debts. This way you can prioritise which debts need to be cleared first and also re-evaluate whether you could be getting a better deal with other creditors.

The next step in the quest to taking control of your debt situation is to make a comprehensive, manageable and realistic budget plan. Start by listing your regular income and outgoings within a certain time period (usually the time period within which you get paid), including standing orders and direct debits and record dates and amounts clearly. Then look back over the last couple of months and get a good picture of your spending habits on more variable items such as food, clothes, entertainment and health products. Once you have all the information you need you will have a good idea of how much disposable income you have left to start managing your debt.

The final stage is to stick to the budgets and targets you set yourself. To achieve this successfully it is crucial that you have set yourself realist goals. Most importantly of all don't bury your head in the sand, be fully aware of your financial situation, try using Internet banking to keep track of your accounts weekly or even more frequently. Feel positive and proud that your paying off your debt and keep it all recorded in your budget so you can visually see how well you have done.

This article is meant as a guide, always seek professional advice for you own particular situation.