Five Steps to Overcoming
Bad Debt Management

Too many people are drowning in debt because of bad debt management. Many people blame it on the availability of easy credit. I disagree. I think each of us has to be responsible for how we choose to spend our money. Getting out of debt is a matter of learning and consistently applying correct money management principles. Good debt management help can help you take control of your life.

It is true that more people need consumer debt management help than ever before. Because so many people struggle with personal debt management, many companies advertise a quick fix… simply take out a bill consolidation loan, pay off your bills and only deal with one company. That could be putting the cart in front of the horse.

Here are five steps help you regain control of your financial life.

Step 1: Recognize that Debt is a Problem

Unfortunately, many people fail to accept they have a debt problem until it is too late. Only when you acknowledge that debt management is a problem can you do anything about it. Alcoholics Anonymous is a classic example of dealing with a problem. An alcoholic is always an alcoholic. However, he can choose not to drink. You can decide that it’s time to take control of your personal debts and financial life.

Step 2: Summarize Your Personal debt

Recognizing you have a problem is very important. However, making a commitment to do something about it is the critical first step. Get out a piece of paper. Write down the following four headings at the top of the paper:

Payee            Payment/month          Interest        Total Owed

Now write down every debt you owe. List the person you pay, the monthly amount, the interest rate and the total amount you owe.

Be sure to write everything down. When you’re done, total the payment/month and the total owed columns. This will tell you exactly what your monthly obligations are.

Now write the following headings at the top of another page:

Source of Income          Amount of Income/month         

Then, total your monthly income. Now divide your total income by your total owed. This will tell you what percentage of your income is going to pay off debt. If you have less than 25%, you can get a handle on your debt much easier. The higher this percent is above 25%, the more challenges you will have to overcome.

However, there is hope if (and only if) you’re willing to seek help and follow good personal debt management advice. If you’re willing to follow sound advice, that means your teachable. If you’re teachable, you can learn to take control of your life and your finances.

Step 3: Track Actual Expenditures

This step will help you more than you ever realize to regain control of your financial life. However, very few people ever do it. Nevertheless, if you’re very serious about managing your debt, you will do it. Take out a piece of paper. At the top write down the following headings:

Date          Amount Spent          What I bought

Take this paper with you wherever you go. For at least two weeks (preferably four weeks), write down absolutely everything you spend. This may not be easy, but it will eliminate all the guesswork concerning your personal money management.

Step 4: Seek Debt Management Help

If you’ve completed the steps above, you are serious about getting control of your financial life. Now is the time to get help with your personal debt management. Be sure to check out multiple companies and compare before you pick one to work with.

Be sure to read the section entitled “ What You Need to Know Before You Hire a Debt Consolidation Company”.

Step 5: Stay the Course

Once you’ve started on the road to a debt free life, follow your plan. Successful debt consolidation and debt management is determined by being consistent over time. Be sure to listen carefully to and follow the advice you get from a reliable debt management counselor. By now, you should have a realistic time frame. You should know exactly how long it will take you to pay off your debts. You’ll not only become debt free, but you will take total control of your life again. Continue to apply the ideas you’ve learned to overcome those bad debt management habits.

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Bad Debt Management