Debt management is the root to debt freedom. It is a fact of life that the longer we are in debt, the more interest we pay. For example, if we have taken a 20 year term housing loan, the total amount of interest we will pay over that long period may eat away our financial resources a great deal. It will also be money that could have been put into better use. It therefore makes good sense to clear your most expensive debts first and do it fast.

It is common knowledge and experience that tells us that people who have several debts have got there largely due to mismanagement of funds. It is when we do not properly or effectively ( and sometimes even foolishly) use the money at our disposal that we find we are left with little or none at all. Isn't what someone said about respecting money and it will respect you ring true!

So then considering the situation as it is, namely, that you are in debt and need to get out of it let's see what we can do to help.

First and foremost you need to put down all your income and expenditure on paper. See it for what it is- clearly and without any frills. Numbers do talk and you can at a glance know what comes in and what goes out. Make a separate column and total the outstanding due to your name. Separate the standard outgoings from the others e.g monthly utility bills are a regular feature but a purchase of a suit for Christmas is not.

You can then see how much is necessary from luxury spending. Your food, clothing and shelter and associated monthly costs are basic.

Once you've sieved through, you will know your wants from your needs. This is vital information. Often what we think we need, is actually a want ? something you can well live without, especially if you want to get out of the red!

Now for the next step. Calculate how much of minimum balance you have to pay for each of your debts. Once you get that figure, and you hopefully have something left as balance, add that to one of the payments that you will be making. Choose the debt that has a highest rate of interest. In that way you can steadily clear the costly debts first.

Of course, The above holds true only if you have some amount left after calculations. What do you do if you don't?

There is a way out here as well. Debt consolidation loan! Take this loan and pay off all the others. You have to only ensure that you can maintain the monthly installments without fail. Check around to see who offers the lowest rate of interest.

There are other important things you can do besides the above to clear your debts fast, Some of which is to employ drastic measures.

How does cutting up your credit cards sound to you? In fact the fastest way to get out of debts is to ensure that you don't get into newer ones. Imagine if you were ill and down with a sore throat. You take the necessary precautions by avoiding cold beverages, effectively use salt water therapy and even take some medication for the condition. However you go for a trek the same day and sprain your foot and as a result while your throat gets better, your foot now causes problems. Cutting up your credit cards will drastically reduce and eliminate future debts.

Make your minimum monthly payments on time. This will ensure that you do not get any late payment fines or penalties.

Transfer your outstandings to a credit card that has a lower rate of interest. In this way you can pay more and clear the debt faster.

If you want to get ahead of the line in paying your debts faster employ a two pronged approach ? don't accrue new debts and steadily clear costly and old ones first.

Copyright 2006 Ranci Endo (UK) Investments