Do all that you can to avoid debt problems. Know how much debt you can afford and don’t go over that limit. Set up a budget so you know how much debt you can afford. Don’t borrow to that limit – leave yourself some room in case something comes up. Think about the trade-offs you are making when you borrow money – and borrow only when it is a good decision for you.

But in the end, some people will get into debt trouble. What can you do if that happens?

• Perhaps the most important advice for you if you are having debt troubles is to face up to your problems and start to do something about them. Don’t try to handle it all alone. If you have close personal friends or family, seek their help and advice. They can also help you deal with what may be a bad situation. You will probably be surprised at how many people will understand and will try to help see you over a rough period.
• Contact your creditors. Don’t simply start missing payments. Most of those who have loaned you money will try to help you get out of the hole you are in. After all, they have an interest in helping you – they hope to get their money back. Work out a new payment schedule with them. You will probably be surprised at how co-operative most creditors will be.
• Put all of your credit cards away to avoid getting into worse trouble. In fact, stop all further borrowing. No sense digging a deeper hole.
• Consider a consolidation loan for your debts. A consolidation loan is one loan you take out to pay back your other loans. In this way you can turn a number of payments for a number of different loans into a single payment for one loan. The monthly cost may be less than the total monthly cost of all other payments combined. If you are carrying debt on credit cards, the interest you will pay on a regular loan will usually be much lower than that on a credit card balance.
• Consider a second job, if you can, to see you over the hurdle and tough times.
• Cash in some investments or savings to lower your debt position. The costs you pay on your debt will usually be greater than the interest you earn on your investments. It may make sense to give up the investment to do away with the debt.
• Seek some professional advice and counselling if you can get it – or if someone will help you get it.
• Review your lifestyle and past decisions. What got you into trouble? What could you change to get out of trouble? What can you give up to get money to help you pay your debts?

When it comes to handling money, and making good money decisions, few things are more important than getting and keeping a good credit rating. Right from the outset, make that one of your priorities. Debt can help you – or debt can hurt you. Borrow wisely. And always stay within a limit you can afford.

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