The key to an effective debt management strategy is work out exactly how much you owe and create a plan to clear that debt. Simple. Well sort of. Getting into debt is simple - e.g. by spending slightly more than you earn each month. So the obvious solution to your debt mountain would be to spend slightly less than you earn each month.

Sit down with a piece of paper and write down every single debt you have (apart from mortgages). Yes - you do have to open those statements you've been ignoring. Separate personal loans from credit card debt. With your credit card debt, note the outstanding balance, interest rate and minimum payment. Do the same for personal loans except, instead of minimum repayment you will have your contractual monthly repayment. If you have any other outstanding debts eg council tax arrears etc. include this in your calculations.

Now for the hard bit. Add them all up. It is important at this point to realise that no matter the size of your debt - there is a solution.

Top tip
If you have any savings at all, even savings which have been squirreled away for a very rainy day, use them to clear off your debt . Here's why. The best savings rate you'll get in a bank is 4.5%, if you're lucky. Compare this with your cheapest loan rate of 8 or 9%. It's a no-brainer!!

Top of your priorities in your debt management stratgey is not losing your house. Make sure that you make mortgage payments on time. Check that you are not paying too much - shop about or contact your bank to see if you can move on to a lower rate. Talk to your mortgage provider if you are struggling with your mortgage payments. They will want to know if you are having problems. It's more cost effective for them to help you than to repossess your house and sell it at below market value.

Next is to make sure you pay your council tax. If you don't pay your council tax the council can make wages and benefits arrestment, sell off goods in your house or even worse imprisonment.

Finally, on your hit list, are debts which have high interest rates. Try to transfer them onto lower rates or interest free credit cards. Even speak to the lender and negotiate a lower rate with them, with the threat that you will take your debt elsewhere. Bizarrely this can work!!

This involves identifying the most expensive debt i.e. the highest APR and putting any spare money to paying that off first, whilst only paying the minimum payment to the others. After that, target the next expensive debt and so on. It can easily be seen that snowballing will save you money in the long run.

Some people, and we all know who they are, can easily balance their household books. They know how much they earn and know how much they can spend. They save up for special occasions and always have a contingency fund. They also probably wash their car, hoover and dust every day. Those who are organised don't have any debt or they have manageable debt. You too can become financially organised, just draw up a SOA (Statement of Affairs). (But you won't have to wash the car, hoover and dust every day!)

Many people who are creating a DMS forget to include an amount for contingencies. These contingencies can be split into two areas - foreseeables and unforseeables. To work out the foreseeables, try and set a budget for Christmas presents, birthdays etc and incorporate it into your SOA. For unforeseeables, make a small allowance but don't fret about it.

Debt Management Options Hope is not lost for those who have debt problems. There are several solutions to your debt problems.

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How to avoid getting into debt Good debt management is more than just dealing with debt when you have a problem it is avoiding the problem form happening in the first place.

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