web analytics

Guest Post: Manage Your Debts – Have a Plan

August 23, 2010 · 14 comments

in Personal Finance

This is a guest post written by Andreas Nicolaides, a personal finance writer for MoneySupermarket.com

Debt can be a horrible thing to face, but it is something many of us face regularly in our day to day lives. Placing yourselves in debt can sometimes be unavoidable, but it’s when we let our debts pile up that they can spiral out of control.  When tackling your debts or when just getting them organized, you should always have a plan.

Have a Plan

You should always know where you financially want to be by a certain point.  Having a plan gives you something to aim for, and when you finally get there, the sense of achievement will be amazing.  When setting targets to strive towards, say ‘I want to be debt free by the end of the year’.  Even though this statement should be long term, it is also easier attain if you set smaller stepping stones, and  build on them so you can move towards your ultimate goal.

Starting is always hard

Look to tackle your debts in a slowly yet surely manner, set yourself small targets like I mentioned above and get started. First things first, you should think about setting up a budget.  Grab a pen and a piece of paper (or two) and note down all of your monthly outgoings as well as any income that you may have.  Try and be honest when creating your budget and write down everything you can think of.  Then deduct your expenditures from your income and see how much money you are left with.  (Note from Kris:  Also make sure you include those once-a-year expenditures by computing a monthly amount and include that in your budget.)

If you have a positive amount left, this is what I like to call flexible cash.  You can either decide to place the majority in a savings account, or use some of it (no matter how little) to pay off some debt, every little bit helps.  You could prefer to do half and half, place half in a bank account and use half to pay off some of your debt.  It is totally up to you the way you decide to approach your budget, there are no set rules here.  (Note from Kris:  Once you have enough in cash to handle small emergencies, attack all high-interest debt aggressively.)

Stick to your budget

In order for you to ensure you always end up with a positive figure at the end of the month, you should try and stick to your budget to the best of your ability.  Of course there might be things that spring up at the last minute that cost money, but try to avoid the impulse purchases and the purchases of life’s little luxuries that you may be drawn towards.

One key tip I tend to use a lot is to make a list .  Make a list of what you need for your home and stick to the list when you’re out and about, doing something simple like this can help you save a lot of money.

Making Money

After you have worked out your budget, if you realize you are actually showing a negative figure, then you should look at other ways that you could possibly make some extra cash.  Could you take another part time job?  Is there unused or unwanted items lying around your home that you could easily sell to make some quick cash?

One thing which you could consider is getting a low interest loan to cover some of your expenditures.  Doing this, you only have one payment which you have to meet each month, taking a lot of pressure of yourself.  When considering this option you could look at small, unsecured loans.   Loans however should only be considered if you trust yourself to meet your regular payments.  If used properly, they can be an effective way of easing pressure and relieving debt.  (Note from Kris:  Make sure you eliminate credit card usage or whatever got your finances in the first place before taking out a loan.  I have seen people charge up their credit cards, take out a loan to pay them off, and then charge up their credit cards again.  That is a recipe for disaster.)

Saving Money

When trying to wipe out your debt you should be looking to save money at every avenue possible.  Checking price comparison sites is an effective way to see if you are paying too much on your bills, as  they do all the hard work for you. You should check all of your utility and insurance bills and try to renegotiate terms.  That could end up with you saving hundreds each year.

It will all be worth it

I know tackling your finances can be hard but try not to give up.  A little saving here and there is progress.  Stick to it and you will reap the rewards in the long run.

From Kris:  Debt can be a real stress in life.  Do your absolute best to only spend within your means, and the benefits will affect many aspects of your life!

If you enjoyed this post, please leave a comment or subscribe to the RSS feed to have future articles delivered to your feed reader. Thanks for visiting!!!

{ 13 comments… read them below or add one }

Money Reasons August 23, 2010 at 9:37 am

I’ve always had it easy with debt. Mostly, because of the way I was raised to not succumb to the temptations of debt.

In fact, I don’t remember my grandparents ever even having credit cards, now that I think about it.

Personally, I did have credit cards since I was 18. But it was my mom and dad’s idea, so that I could build up a credit history. Even then, I was prudent and still followed my grandparent’s principles about debt.

I live by the rule: If I can’t afford it, I don’t buy it.

Today, I mainly use credit cards to take advantage of the rewards programs that they have! This can add up to a decent size penny by the end of the year!!!


Kris August 23, 2010 at 10:18 pm

Money Reasons – I love my credit card rewards!

You are very lucky to have had such a good head on your shoulders at such a young age. Your family should be applauded.

I think my grandma’s credit card had a limit of 300 dollars. I loved that. I don’t think she ever really used it, but had it in case of emergency.


Budgeting in the Fun Stuff August 23, 2010 at 11:32 am

Like Money Reasons, I can thank my family for teaching me about debt early on so we don’t get in above our heads. If managing money was taught to every kid everywhere, I bet there would be less financial problems in their future…


Kris August 23, 2010 at 10:15 pm

BFS – I have a draft post actually in the workds right now about how poorly people are prepared for basic personal finance. Our educational system really lets kids down in this regard. Maybe if finance/economics were part of standardized testing, there would be more business education. (I am not ripping on teachers by any means. I just think schools should make personal finance a graduation requirement.)


Budgeting in the Fun Stuff August 24, 2010 at 11:29 am

Mr. BFS and I agree. Some high schools offer a class or two, but 99% don’t. Kids need to be better prepared but schools already have to cut out most unnecessary classes so they can cut out teaching positions and need less priceless room. Our educational system seems broken to me.


Khaleef @ KNS Financial August 23, 2010 at 3:26 pm

When I turned 18, I had a very short-sighted view of money. That put me in a terrible position that I am still trying to fight out of. But, I know have goals, a budget, and a plan of attack! Hopefully, we’ll be out of debt in a few years!


Kris August 23, 2010 at 10:14 pm

Khaleef – it is hard to be mature enough to make perfect spending decisions when you are 18. You are just getting some freedom and figuring adulthood out. Forget the past, stick to your goals, and you will be fine!


Rob Ward August 23, 2010 at 4:43 pm

Great points, especially when it comes to having a plan and sticking to a budget. Both of those will really help you stick to your guns as it were. Even for me, as someone who has always been a bit more “financially minded” I sometimes forget what the original plan was and get sidetracked.


Kris August 23, 2010 at 10:13 pm

Rob – you are right, it is easy to get sidetracked. It is just so easy to spend, and sometimes it is really hard to say no. If you have a goal in the forefront of your mind though, it can help keep you from making that extra purchase.


Suba @ Wealth Informatics August 23, 2010 at 7:59 pm

Like Money Reasons and BFS, I never really had any problems with debt. When I was growing up credit cards were non existent and all debt, any debt was bad. I grew up seeing my mother budget and manage our finances flawlessly, but being on my own for the first time I went a little overboard and started spending randomly. I never saved during my early working years, at least I stopped spending when I started to get low on cash flow. That fear of debt kept me out of debt. I am thankful for that. Now that I have goals and developed a spending plan, it has gotten much easier to save.


Kris August 23, 2010 at 10:11 pm

Hi Suba! It is much easier to save when you have a plan. I think that plan can keep you on track and help keep you from spending when you are on the fence about something.


Kay Lynn @ Bucksome Boomer August 24, 2010 at 8:55 am

I grew up thinking it was normal to have continual debt. My mom and dad are in their 70’s and have car payments and a mortgage. I don’t want that stress or to “have” to work.


Kris August 24, 2010 at 3:12 pm

Kay Lynn – I don’t blame you for not wanting that debt stress. I would have less stress if the economy wasn’t such a bummer!


Leave a Comment

{ 1 trackback }

Previous post:

Next post: