If you’re in a position where you recognise your need to get rid of debt, you definitely on the right track. The only big question here is: How?

Getting rid of debt can be particularly tough if you’re on a tight budget, don’t have a job or still relying heavily on high-interest credit cards to make ends meet. In short, if you’re still accumulating debt, how could you reduce your existing pile of debt? But even in this case, you must not ignore your existing debt. Taking action to control your spending and manage your debt carefully could save you from spiralling out of control.

So here are some tips for each of these scenarios.

Know your debt

Many people are unaware of how much they really have. Several credit cards, personal loans, car loans and a mortgage can be hard to track. But the good news is all debt is not the same. Long-term debt like your car loan and mortgage don’t have to worry you. What you need to focus on reducing is short-term and revolving debt, like credit cards and personal loans.

Start with calculating your outstanding debt and know the interest and penalties you’re paying every month on each line of credit or credit card. You might be surprised how much these charges and fees vary. Although all of them may be expensive, some might be better than others.

Know your resources

Do you see a change in your situation within the next six to nine months? Will you be able to increase your income? If the answer is yes, you might consider transferring your debt to a credit card that offer free balance transfer and zero APR for a set period of time.

This option can give you a break for a while from paying high interest on your credit card debt, but it is not a long-term solution. So don’t be tempted to use it if you don’t foresee a change in your circumstances.

Reduce your expenses

This is a no-brainer. But it is easier said than done. If you want to pay off your debt, you will have to come up with the money somehow. Continuing to live and spend at your lifestyle won’t help. It is time for you to make some hard decisions and compromises.

Instead of taking a random approach to your willingness to cut expenses, set a budget. For example, if you’re spending DH3,000 a month on groceries and eating out, plan to reduce this amount by Dh500. From there, make a week budget and stick to it. Do the same exercise in each and every major item of spending and reduce your leisure spending to the minimal since you obviously don’t have much disposal income.

Again, these are major lifestyle changes, but they are the only way you will be able to reduce or pay off your debt if you’re on a tight budget.

Consolidate your debt

Talk with your bank or banks about ways to consolidate your debt. They might over long-term financing or draft a payment plan that is manageable for your circumstances. People often are concerned about sharing their financial troubles with banks, but you might be surprised that the bank actually wants you to pay off your debt. Yes, banks make money from interest, but they are not in the business of pushing people to default. So before you get knee deep into debt, check out if you have alternatives with your bank.

These debt-consolidation plans often don’t work unless you are determined to reduce or totally eliminate new debt. So your approach should combine a debt-consolidation plan along with a tighter, leaner lifestyle. To motivate yourself, remember that a few months of austerity can set you free of debt. In the process, you will learn that you can live on much less, if needed.

The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.

■  Get rid of debt
■  Know how much high-interest debt you have
■  Consider balance transfer credit cards
■  Scale back on lifestyle spending
■  Consolidate your debt

— R.O.