Last Updated on Mar 6, 2020 by James W




Debt can be a very serious problem and it affects many people around the world. For people, having debt can serious emotional impact, you could worry about it and get angry about it so it can strain social relations. For the economy, high household debt is one of the reasons behind nationwide economic crises. Household debt can be huge. In the U.S. alone, household debt is said to be at $12.9 trillion during the second quarter of 2012.

Debt management is an important part of one’s overall financial health, so let’s look at some tips on how you can manage your debt and become debt free.

Start Tracking Your Expenses

How did you get into debt in the first place? Did you get one big loan from a bank or someone and is now unable to pay the loan back? Or perhaps there’s an imbalance on your expenses and income and you’re spending more every month than you make.

You should start tracking your expenses to get a picture of your financial standing. You can use a notebook where you will write down all of your expenses. Write down ALL of your daily expenses on there, even the very small purchases you make every day like the pack of gum you bought at a convenience store on a whim. On this journal, you’ll also write down the BIGGER expenses for the month like bills or groceries. Other big expenses include loan payments such home loans and personal loans.

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If you have a smartphone, there are many free apps available out there that will make this task easier. The outcome from this exercise is that you will find out where your money is going to and you can identify some of the less important things that you could cut back on. This will make more funds available to you that could go to paying down your debt.

You also might discover in this exercise that you’re really paying for the essentials (like for your house and food) and that you’re not buying “nonessentials.” This probably indicates that your income is just not enough and that’s the reason you’re going into debt. You might therefore want to consider asking for a raise or going for a better paying job.

Debt Consolidation

If after that exercise, you discover that a lot of your money is going to paying off several loans, then you might want to consider consolidating all of your debt into one source. A common reason for incurring a lot of debt is having multiple credit cards or having several loan types like a personal loan or car loan. Debt consolidation could lead to lower interest payment and lower monthly debt payment.

Pay off your highest-rate debts first

Another way to pay down multiple loans is to pay off the ones with the highest rates first. You can allocate more of your resources to paying off these high rate loans and pay the minimum on the others. Keep doing this until you’ve eliminated the ones with the highest rate then move on to the one on your list.

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Tracking your expenses to get a picture of your financial health and paying off your highest-rate debt first and or consolidating your debt are just a few of the things you can do to start managing your debt. There’s no one magic solution to getting rid of debt. It takes many baby steps like changing your spending habits, and many little victories like paying off your highest rate-debt first before tackling others, before you can finally achieve freedom from debt.

Author Bio:

Michael Vincent writes the article in behalf of Compare Hero for Make Money in Life. Compare Hero is Malaysia’s leading financial comparison site. Compare a broad range of financial products for free, to make better financial decisions.


Founder and chief editor of Blogger, Affiliate Marketer, Tech and SEO geek. Started this blog in 2011 to help others learn how to work from home, make money online or anything related to business and finances. You can contact me at

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