In today’s day and age, staying out of debt can be a difficult task.
Rising costs coupled with rising unemployment has, and will continue to force many people into financial difficulties.

So, if your finances are under pressure or you are worried they may become strained in the near future, take a look at this guide to find out how you could lower your costs and stay out of debt.

Step one: Keep a spending diary

To help keep track of where your money is going each month, you should keep a spending diary.

This is basically a log of everything you spend during the course of a month. You may find it useful to record your spending from payday to payday – that way, it will be easier to calculate how much you have actually spent from the time you were paid.

The diary itself can be a simple record of everything you have spent money on – such as food, utility bills and CDs. Every time you spend money, you should write down how much you have spent, what you spent it on and the date you spent it.

Step two: Cut back on your non-essential spending

Once you have recorded your spending for a month, you should take a look at your spending diary and highlight all the things you didn’t actually need to spend money on – for example: takeaway food, gym subscription, magazines, etc.

You should add up how much you spent on things you didn’t need over the course of the month. Once you have this total, have a think about what you could have used that money for – improving your financial situation by saving, for example, or making payments to any debts you may have.

Step three: Cut back at home to save money

Aside from cutting back on your non-essential spending, there are ways you could save money at home. Of course, you have the obvious ways like switching the lights off when you’re not in the room, and turning the thermostat down when you go out. However, there are other ways you can cut back at home to save money – maybe some ways you haven’t thought of before. For example, you could save your old vegetable peels, leave them in the garden and use them as compost – meaning you won’t have to buy any when the gardening season comes round! Or you could make a point of making everything yourself so you don’t have to spend money unnecessarily – growing your own herbs and vegetables, for example, or creating your own air fresheners. Alternatively, you could make an investment in some energy-efficient appliances to save money on your bills.

Step four: Seek debt advice

If you do find that your finances become difficult to manage, and you fall into debt, it may be worthwhile to seek professional debt advice.
An experienced adviser will be able to assess your situation and depending on your level of debt, recommend a suitable solution. For example, if you can afford your debt repayments, but would like to make them easier to manage, the adviser may recommend a debt consolidation loan. Whereas if you are unable to meet your repayments as they stand but could afford to repay your debt within a reasonable period of time, they may advise you to look into a debt management plan. Alternatively, if your debts are unmanageable and you don’t think you’ll ever be able to repay them, you may be advised to look into an IVA (Individual Voluntary Arrangement) or bankruptcy.