Taking Control of your Finances

If you are serious about reducing personal debt, you will have now looked at all your financial details and recorded them so that you can create a budget. All those lists you should have made showing your income, assets, liabilities and expenses, can now be used to review your financial position. You will be able to identify where financial improvements can be made, anticipate potential problems, as well as start the framework for your own 'get out of debt' programme, which will enable you to look forward to a future where you will be able to start saving instead of borrowing. Once savings replace debt, life becomes a lot more relaxed and you have more options open to you.

Whatever your level of debt burden, the principles for getting out of debt are much the same. A combination of earn more, reduce expenses, spend less, and then to channel as much of the savings you have made, into reducing debts.

Don't be daunted by the prospect of dealing with all the figures you have collated. It may be a serious situation you need to get on top of, but think of it as a giant puzzle, and use your imagination to achieve what needs to be done. Then you will come to terms with the changes you need to make in your life to clear your debt, and enjoy the better times ahead.

Remember the Charles Dickens quotation a few pages back? If you spend less than you earn you will be financially ok. Spend more than you earn and the problems set in.

Review Everything

With all your financial data recorded, you can now start to review everything and to see where savings and improvements can be made. Remember, this whole exercise is to help you control your spending so that debt can be reduced, and then eliminated. You need to make additional money available each month to make increased payments to reduce your debts.

Your initial objective is to spend no more than, and preferably less than, your income. This will prevent your debt increasing. Your secondary objective will be to spend less overall, thus providing surplus cash each month to accelerate debt repayments. When you are clear of debt this surplus cash can form the start of your savings.

It should be possible to make improvements in many areas of your short term spending that can be felt immediately. Other spending, like annual charges, will take longer to improve on.

You need to ask be asking yourself:

• Can I earn more?
• Can I sell something to raise some cash?
• Do I use too much?
• Can I reduce my consumption of some items?
• How can I spend less but maintain a similar standard of living?
• Am I paying too much for goods or services?
• Am I paying over the odds for my borrowings?
  

Now is the time to be more specific and to look at each area of your finances in turn. You must decide a budget that you can stick to.

Income Review
Assets Review
Liabilities Review
Expenses Review