Here is a very simple principle that can be put in to practice quickly and easily, and almost anyone can do it.

Each week day, simply put aside $2, and at the end of each week, put this $10 against the debt that has the highest interest rate (usually your credit card or store card). At this rate, you’ll be paying an extra $520 per year against this debt on top of your regular repayments. Even better, you’ll have saved an additional $63.83 in interest.

If you don’t have $2 per day to put aside, take a look at your daily spending habits and maybe go without a newspaper or coffee each day.

Making a commitment to this simple plan will set you up for long term success as the saving will become habitual. Once you have mastered the $2 per day principle, move on to $3 per day for the next year!

If your debts have spiraled out of control, or are heading that way, the very worst thing you can do is nothing. If debt recovery agencies get involved, or you get a court order against you, things can go from bad to unbearable.

To help avoid things getting much, much worse you should immediately contact all financial creditors and let them know the state of things for you at the moment. Make sure you outline all your other debts to them so they clearly understand your situation.

Make no mistake, no financial institution wants to end up with a bad debt that can’t be repaid, and most (if not all) will be willing to work with you to help you pay back your debt over time. Talk to them about what you feel you can afford to repay from each pay. If you can repay any amount upfront as a lump sum, this will go a long way to demonstrating to them that you mean business.

Working together like this can also help protect your credit rating as they may not file against you as you are not ignoring the situation. A word of warning though, do not under any circumstances miss any payment you have agreed upon. If your situation changes again, make sure you communicate with your creditors ASAP.

Remember, effective communication is the key to getting things under control. Most financial institutions would rather get $5 per month for the next 10 years that end up with a bad debt that can’t be repaid.

If you find yourself struggling to pay your bills when they come in (and who hasn’t at one time or another!), then you might find this approach useful:

After only 2 or 3 pay packets you’ll find there’ll be enough in there to cover bills as they come in, and you’ll start to feel like your in control of your money again.*The reason for dividing by a lesser number than you actually get paid is to help allow for unexpected bills that tend to arise from time to time.