Planning and management may seem intimidating at times, but these are, if used well our best allies in any type of crisis, including financial distress. Entering into debt is easy and so exhilarating that unless you are very careful, it would engulf you in no time. Plastic money, easily processed loans, payday loans, and so on can tempt you into living beyond your means, which gradually would overcome you totally.

The good news is that you can reverse the situation at any time you want, no matter how deeply you are indebted, it is very possible to resolve it if you apply some simple financial management strategies.

1. Budget your expenses – draw a list with the things you normally buy every month and make the total. Whatever is your total, try reducing it by 30-40% by removing all those items that you could do without. Though this would mean no more burgers or Chinese food for a while, you would be rewarded and gratified by the fact that this would help you reduce your debts speedily.
2. Ensure your family’s cooperation – it does not seem much when you read it, but the cooperation from your family is critical to your success. Walk to school/ office or use a car pool; ask everyone to make their own sandwiches for lunch instead of eating at the fast-food joints; avoid sales unless you need to buy something; substitute pizzas with homemade snacks; cut on cigarettes, alcoholic beverages, weekend barbeque parties, aerated drinks, etc. The list is endless. All these, one by one would add to your kitty that could be used to repay the debts faster.
3. Save – learn to save. It does not matter how much you earn, you should always put aside 20% of your income: 10% give for charity and 10% invest it in a saving plan. If you are unsure about what would be your best options, this is one thing you could splurge on, i.e. find yourself a goof financial analyst who could advise you how to invest your money for the best possible returns.
4. Invest in insurance – financial management means you are ready for any eventuality. This ‘always ready’ mode translates into one word: insurance. Insure everything you have, i.e. home, vehicle, your belongings, etc. This would cost you a little, but when misfortune strikes, you will be protected. It is also important to have yourself and your family insured for health expenses. Count these expenditure heads under ‘basic necessities’ when you make your budget.
5. Increase your earning capacity – though this is so obvious, this is normally the last thing on your mind when you are sinking in the quicksand of debt. Take a close look at what you are earning and think seriously whether you can improve on it. This could be done by starting a home based business on the Internet (or offline), by taking up a part-time job, by offering your services as a consultant, by asking a raise (provided you eligible for it), change your job for a better paying one, acquire new skills whereby you could be valued higher professionally, and so on.

These steps seem difficult, but once you decide to implement them you would find the results far more rewarding that the seemingly inconvenience they impose. Plus, you would be walking on the path that leads you to complete freedom from debt.