How To Face Your Debt & Make A Budget

Last updated: May 31, 2023

Are you in debt? If so, do you know the full total of how much you owe? Facing your debt and making a budget is one of the most important things you can do for yourself if you have money worries. If you are wondering how to get out of debt, the tips below can point you in the right direction and help you get back in control of your finances.

I am talking here about debts such as those we pile on to credit cards, store cards, overdrafts etc (not your mortgage). I was in denial for a very long time about the exact sum of the money I owed various creditors. In fact, it probably wasn’t denial; just a fear of knowing the truth of what I’d done to myself via extreme overspending and living outside of my means. I knew it was bad, but I didn’t really want to know how bad.

I am guilty of living vastly outside my means for years at a time, gradually building up more debt and as a result, finding spare cash become increasingly scarce as my repayments for these debts grew larger. It’s a dangerous spiral to find yourself in, as if this continues you will one day find yourself unable to afford minimum payments for anything, which is a desperate situation.

As frightening as it was, I took it upon myself to face the sum of my debt. I looked at each and every amount, wrote it down, added them all up, hated myself for a while, felt depressed and then…felt so much better. In fact, I felt relief. Finally I knew the truth. I was no longer walking around with my head in the sand, and I vowed to resolve the situation as quickly as possible and take control of my finances. This is what I recommend you do if you find yourself in debt and are unable to gan control of it:

Face your fear

As daunting as it is, I encourage you to write down each and every debt you have. Then add them up. Prepare to feel depressed, angry, scared….but also prepare to feel relieved that you have finally done this. It’s an important first step.

Stop spending

This is easier than it sounds. The first few days are difficult if you’re used to buying whatever you want without a second thought. But stop and think….do you need that can of Diet Coke from the vending machine when there’s a free water fountain at work? Can you bring your own lunch in? This one saves me a small fortune each week. Put all your spare change in a jar somewhere and don’t draw any cash out. That way, even if you want something, you can’t buy it, and you’ll soon forget about it.

Form a budget

I recommend downloading a spreadsheet which you can use to list all your outgoing payments (there’s loads available online if you Google them). I have one with a worksheet for every month. It deducts all my outgoings from all my income, and leaves me with a monthly total of available cash (or otherwise). Make it your mission to see the available amount increase from month to month, which is a great motivator to keep going. If your expenses exceed your income, or you are struggling to meet your outgoings (including bills) then I recommend that you speak to a reputable source as soon as possible. Trustworthy advice on your available options are available from Citizens Advice, and you can also get more information from Money Saving Expert. Remember that there are always solutions to any debt problem, excellent help is available and you are not alone.

See where you can save money

Perhaps you’re paying a ridiculous amount on your phone when you could switch to a cheaper tariff, or maybe you have direct debits going out of your account which are years old and for things you don’t need. See where you can reduce your outgoings on non-essential and essential items. It takes a while to get these things sorted, particularly for boring things like contents insurance, car insurance etc. But it’s totally worthwhile to spend a day sorting these out. Remember, this is your money which you work hard for, so why let more of it go than you should?

Sell what you can

A great way to get a kickstart on paying back some of your debt is to really take a good look at your possessions and see what you don’t need. I am a huge fan of decluttering, for the wallet and the soul. If you can sell something, sell it and use the money to put yourself on a better financial footing. See all my tips for selling items online. 

Feel stronger and more positive

Taking the actions above puts you back in control, which is a wonderful feeling. When you get a handle on your finances, you will have more spare cash which you can put towards any debt you have. The journey towards being debt-free begins.

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If you are in debt, I hope the tips above help you to get back in control of your finances. You must also remember that you are not alone, and that there is always a solution to any financial problem.