If you find yourself dealing with a high debt-to-income ratio, it is important that you take a step back and look at your finances. Correctly managing your personal finances is essential to avoiding bankruptcy, foreclosure, and other serious problems. The problem is, most people aren’t sure how to start monitoring their finances and don’t know what they can do to manage their debt. Here are some tips you need to follow if you want to control your spending.
 
Know your Money
Before you can set up a plan for your debt problems, you need to know what your income will be. Where is the money coming from, and how much do you have? How often will you be paid? Once you have your income listed, go through all of your bills. List out how much your fixed expenses are, including your mortgage or rent. Then write a list of all the daily expenses you have. How much will you pay for food and so forth? Finally, list your credit card debt, personal loans, student loans, and other debts. This will help you determine if you have enough income to cover everything. If you don’t, chances are that you will need to pick up a second job for a while to help pay your debts and expenses.

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Repayment Plan
Once you have a list of your debts, organize them into a structured repayment plan. This plan should include the list of the debts with the highest interest rates, payment amounts, and other costs. Create a plan of attack as to how you would like to pay off these debts. Do you want to pay down the debts with the highest monthly payment amount, the lowest balance, or the highest interest rate? To help you create a good repayment plan, discuss your situation with your creditors. If you call them and negotiate, some will reduce your monthly payment amount or interest rate. This can help you arrange an agreement with the creditor to completely pay back your debt in three to five years. Track your debt each month to see how you are able to slowly dig yourself out of debt.

Debt Settlement
If you are struggling with debt, contact a debt settlement company. This is a great option because the company will contact each of your creditors to reduce your monthly payment and interest amounts. Then, instead of paying multiple creditors each month, you will make one payment to the debt settlement company. They will then disperse the money to the various creditors according to the contract. Compare the costs of the debt settlement company with the amount you pay each month currently. With a debt settlement plan, you can easily pay off your debts within five years. If you choose to continue trying to pay your debts on your own, without changing your spending habits, it can leave you with debt for twenty years or more.

Save Money
Once you have a system that helps you pay off debt, focus on your future. Set aside money into your savings account each month. Even setting aside $20 a paycheck is better than nothing. This money can be used to help you out when you do get into a difficult situation. As you continue to pay down debt, increase the amount of money you save until you are able to save at least 10 percent or more of your total monthly income.

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