Increasing prosperity and economic growth has paradoxically led to record levels of personal debt. Modern life offers a bewildering array of possibilities for getting into debt — financial institutions make it as easy as possible. But, when you face a mountain of debt, don’t expect much help from them in overcoming the situation.

Debt can bring anxiety, stress and unhappiness; but, by being aware of your financial situation you can enjoy life without permanently battling against the problem of debt. To avoid suffering from serious debt problems consider these suggestions:

1. Buy what you need

It’s easy to buy things we actually don’t need or very rarely use. Look in your wardrobe and count the number of clothes that you rarely wear. Before buying a good, try to evaluate its usefulness to yourself; give it a mark out of 10. If you give items an honest score, you will think twice before spending $100 on your 7th pair of designer shoes. If you’re an impulsive buyer, try waiting a day before buying something. If you really want and need it you can come back the next day.

2. The $70 dollar test

If you have a real problem with excess spending, try this test. For a week, give yourself $70 cash, and put away all credit cards. This forces you to live on $10 a day. When you are faced with a strict income, it forces you to be very careful in what you spend. It will make you realise what is really indispensable and which spending is mere extravagance. This will also force you to be inventive. For example, rather than spending $15 on a take away lunch, you may make your own. Quite often, by taking these steps we realize our previous spending habits were not at all essential to our happiness.

3. How Much do you Spend?

It is easy to forget how much we spend. For example, with credit cards we don’t see the money leave our wallet so it, somehow, seems less real. Most people in debt live in denial at how much they spend on certain items; when faced with their true expenditure it can often be a shock. For example, maybe you get two takeaway coffees per day and one pastry. This can easily add upto $15 a day, which is nearly $100 a week – that’s $5000 a year! We may be reluctant to spend $2000 on a computer because it is a big outlay. But, at the start of the year, would we be so keen to put aside a lump sum of $5000 just for the purchase of coffee and pastries?

4. Tear up Credit Cards.

Credit cards can be useful if you never miss a payment, and pay the balance in full. If you are able to do this then credit cards are working for you. However, if you find credit cards only encourage you to spend beyond your means, consider getting rid of all credit cards, at least for a time. This makes sure that you only spend what you have available.

5. Financial Education

In school we get taught about ancient history, chemistry, and how to differentiate a complex equation; in fact we can learn anything apart from what is important in the real world. If you struggle to grasp the meaning of APR, debt settlements, compound interest, spend some time to learn about the workings of financial issues. At a very basic level, make sure you are aware of how much interest you are being charged and the penalties for a late payment.

6. Manage Debt

If you do have a moderate amount of debt, this need not be a problem. The important thing is that it is managed in a careful way. Make sure you move the debt to the lowest interest paying account possible. For example, if you have debt on a credit card, you could be paying the standard variable rate of upto 18{54c12dad2cc2b53ae830e39915b1a3e70288dbcbbeb8bbf8395437c5dc3c512c}. Other credit cards may enable you to switch the balance at 0{54c12dad2cc2b53ae830e39915b1a3e70288dbcbbeb8bbf8395437c5dc3c512c} interest for 6-12 months. By keeping interest payments as low as possible, it enables you to pay money to reducing the amount of debt, rather than just paying interest.

7. Spending does not equal happiness

A growing phenomena amongst shoppers is the idea of “retail therapy” Basically, we get satisfaction from spending money, even if the goods we buy are rarely used. If you rely on spending money to gain happiness, you need to think very carefully about whether this is a good way to get satisfaction in life. This is not to say shopping is always bad; the point is that spending money does not equate to real happiness.

This article was written by Tejvan R. Pettinger. He works as an Economics teacher in Oxford and updates a blog offering advice on debt, finance and mortgages.