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Debt Management Program

Debt Management

Planning a personal debt management program

Planning your own debt management program needn't be as daunting as it sounds. Even if you feel your debt has overwhelmed you there are lots of simple steps you can take to reign in your spending and take control of your financial affairs. All it takes is a little thought and some self-control.

Know your enemy


As painful as it may be, sit down and calculate your total debts. Ignoring the problem won't make it magically disappear. If you don't know what you're up against it's difficult to plan a debt management program to try and deal with it. If you've got several credit cards find out the balance on each and write them down. Add on any outstanding car payments, mortgage repayments, unpaid utility bills, arrears on hire purchase equipment, loans from friends or family and any other outstanding debts.

Face the situation head on

Now you've got an overall total for how much you owe, you need to assess your ability to pay off the debts. Do you have any monthly savings? Could these be spared to gradually reduce the debt? Debt repayment should be a priority over savings; the quicker you pay off your debts the less interest you'll pay. Calculate how much you can afford to pay off each month and how long it would take to clear the debt. If the whole thing seems manageable you're well on the way to creating a personal debt management program. However, if this doesn't seem like a realistic solution you may need to take a serious look at your spending patterns or seek professional advice. See our page on where to get debt management help for more information.

Cost cutting

The next step is to sit down and examine your monthly spending habits and look for costs that could be eliminated. Write down all the essential things that have to be paid for: rent or mortgage repayments, utility bills and travel expenses. Then look at the necessary costs that aren't fixed such as your food bill. Take a look at your till receipt and try to find where you could have made savings. Cut out little luxuries such as chips and cookies, ready-made meals and gourmet brand products. Next time you shop just do without and be more careful about examining prices to make sure you're buying the best value brands and produce. You'll be surprised at how much you can save.

Next, examine your other monthly costs such as the phone bill, entertainment costs and spending on clothing. Try to reduce the use of your cell phone. Use the landline and save money. Cut out little treats like going to the movies, getting a take-out or giving in to retail therapy. Focus your mind and you can reduce your monthly outgoings to a minimum.


Keeping track of your income and spending habits is invaluable. It'll clearly show where you can make savings and get you thinking about implementing your debt management program. First, write down your income after tax. Then subtract all the fixed monthly outgoings, and then all your other expenses. If there is anything left over earmark this money for debt repayment.

Keep a diary

It's a really simple thing to do but might just shock you into action. Keep a diary of everything you spend right down to that coffee on the way to work and the magazine you buy on the subway home. At the end of the week figure out how much you've spent in total and how much you could save by cutting out these little things: making your own lunch instead of buying a gourmet sandwich or just avoiding the shops at lunch time.

Spend only what you have

Above all don't increase your debt while attempting to reduce it. Spend only what you have. Be ruthlessly determined to reduce that debt. Knowing that your TV and hi-fi, car, or even home could be repossessed if it all gets out of hand should be enough to keep you on track. If not, stay out of the way of temptation: take a walk in the park on Saturday afternoon, not a walk through the mall. Eat home-cooked meals, lock away your credit cards, avoid the home shopping channel and stay focused on reducing that debt.