x Abu Dhabi, UAESaturday 22 July 2017

How to approach debt

Sometimes just admitting you have debt issues can be the most difficult step.

1 Acknowledge the problem. Sometimes just admitting you have debt issues can be the most difficult step. You must believe that there is a way out and commit to the fact that drastic measures are needed. Understand that you must be aggressive in paying off debt, but at the same time, stay realistic.

2 Maximise your cash flow and reduce your expenses. There are dozens of ways to cut back on spending. Rethinking your rent is a huge expenditure to consider. Start recording all of your outgoings on a spreadsheet. It would be unrealistic to adopt sweeping changes, but pick one or two areas and stick to it.

3 Boost your income. Cash is king, regardless of what cutbacks you make. Is overtime available? Are there career advancement opportunities on your radar? Now might be the time to get aggressive.

4 Change spending habits that lead to debt. Debt isn't something that just happens. Our choices and behaviour determine our financial health. The most basic rule is not spending more than what you earn. Stop spending money you don't have, avoid using credit cards for ordinary purchases and never use debt to pay off debt.

5 Grasp the basics of budgeting. Understanding where your money is going is the foundation of every financial plan. Keep receipts, write down all of your expenditures and, most of all, be honest with yourself. Only then can you draft short- and long-term goals and move from the red to the black.

With information courtesy of International Swiss Debt Management