Getting hands on in tackling your debt pile

If you have sizeable debts, it is likely you will be experiencing stress and anxiety over your financial affairs. Those who struggle with debt are often embarrassed to find themselves in the situation and tend to become secretive, which can lead to tension and arguments with family and friends.

You know about your worries but they don’t, and all they can see is that your behaviour has changed. They may even ask you what is wrong, but you are too ashamed to admit what the problem is and maintain that everything is fine.

Financial problems can be a great source of stress. When you can balance your personal or business budget, then you feel in control. But when it becomes unbalanced, then feelings of being out of control can be overwhelming. Demands for payments regarding credit card interest and bank borrowing become increasingly intimidating.

If you find yourself unduly stressed because of financial worries, you first need to sit down and carefully examine your income and expenditure to determine how you can maximise the former and minimise the latter. If you are spending too much of the income on eating out or going to the movies instead of paying the bills, you have a serious problem that will need to be addressed.

It can be really stressful thinking about how much money you owe but the rationale is that as soon as you can take better control of your expenses, the sooner will your stress be minimised. In reviewing where you are spending your money and on what, you will then have to make some important decisions.

To increase your available cash you will need to reduce or eliminate those items of expenditure that are non-essential. This might mean taking sandwiches to the office instead of having lunch out or postponing the purchase of that new car you thought was really essential, but is not.

So let us look at an action plan to take you from the red into the black:

* Acceptance: Accept debt is a problem and that it will not go away by itself. For many of us, debt can creep up slowly over a period of time, so that we really don’t notice it. You convince yourself that borrowing on your credit card is a good idea and can be paid off at some future date. In other words, you lose control over your budget and your credit card starts to control you.

* Talk about your debt: Once you have accepted that you have a debt problem, then find the right person to whom you can talk to for advice. Even though you may feel ashamed, talk to family or close friends. However, I know it is not always easy to admit financial problems to someone you know and you may prefer to talk to a professional debt counsellor.

* Make a plan: Don’t ignore bills or final demands you receive by putting them in the drawer and think they will go away. The sooner you start to take action, the sooner your problem will be resolved. First of all, it is critical to contact your creditors as early as possible to inform them that you have difficulties in repayment and they will often agree to reschedule the debt to reduce the amount payable each month or to extend the term. As soon you take action, you will feel more in control.

Once out of the red, look back to determine what lessons were gained from the experience. Why was it that you got into debt and what are the control measures you must implement to ensure that it doesn’t happen again?

For many, spending can be a way of lifting their mood. We laugh about ‘retail therapy’ and it is fine as long as there is money in the bank to support it.

For others, shopping can be an addiction which is difficult to stop and if you find yourself in this situation, you may need professional help to overcome it. But, whatever you do, do not ignore debt problems.