This article was written by Andreas Nicolaides a finance and debt management author for MoneySupermarket.com.

Most of us will face the dreaded word debt at one time or another; whether it’s when we’re buying a new house or a new car, it’s just a part of life. However, successful debt management is a totally different story.

I can’t stress enough how important managing your debts (no matter how big or small) actually is, if you don’t monitor your expenses or who you owe money to, then how do you know how much debt you actually have?

Monitoring your expenses

Spending more than you earn is a sure fire way to seeing your debts spiraling out of control and this can easily happen if you don’t monitor your expenses. To start monitoring your expenses you first need to know what money leaves your account and where it goes. A quick way you can get the basic idea of where you’re spending your money, is by looking at your bank statements.

To monitor my expenses the easiest way I found is by using a spreadsheet, but just to get started grab a pen and a piece of paper and note down any regular debt repayments. An example of a regular payment could be your phone bill or a credit card payment.

Write down all of your expenses and add up to a total figure, I like to do this on a monthly and a yearly basis to find out exactly how much your debt repayments are. You have to know what all of your obligations are in order to properly begin managing money.

Once you know what your repayment figures are, it’s time to find out your total debt figure. To do this you need to note down the information of all your creditors; these are all the people who you owe money to. I know this is a very daunting prospect but once you have your total debt figure, you then have something to work towards.

Set yourself debt targets

Once you have your debt figure it’s time to set yourself some targets. Targets help to keep you motivated and they give you something to financially aim towards. You should set for yourself a realistic target that is achievable – there’s nothing more demoralising than looking at a massive amount of debt and thinking that you can wipe it all out within a week, then facing the hard fact is that it’s going to take time.

Once you have set a realistic target for yourself, you should look at setting yourself short and long-term goals. A short term goal could be to wipe out one of your credit cards, where a long term goal could be to wipe out all of your credit card debt by the end of the year.

What can you do to reduce your level of debt?

To reduce your level of debt just best way is to reduce your debt repayments and hence your expenditure, here’s a few quick tips to help you reduce your debt figure:

Save money wherever you can! – Look at ways where you save money day to day, check your regular bills and use price comparison websites to see if you can save money there. Also try and reduce your spending on food by trying to adopt a more frugal approach – then use the savings to pay down debt.

Interest heavy debt – This is the sort of debt that you should try and tackle aggressively. Whenever you have put some money aside to reduce your debts, tackle these debts first

Debt consolidation – This should only be an option if you feel your level of debt is uncontrollable. A debt consolidation loan allows you to take out a loan to consolidate (hence the name) all of your other debts. The upside of this is one manageable monthly re-payment and no creditors chasing you for cash. The downside is that the loans terms could be set over a long period of time, so you may be paying it back for the foreseeable future

Reduce fuel costs – Is your place of work close enough to bike to? If so, then why not try it? You can keep fit, help the environment and save money all at the same time

These are just a few tips off the top of my head, there are plenty of ways that you can reduce your expenditure and save money, grab a pen and piece of paper (again) and brainstorm all of your ideas, then work out which ways work best for you.

Don’t give in!

Debt is one of those things that won’t just go away overnight; however, making little progress often does make a big difference. If you tackle your debts as aggressively as you can and you don’t give in then you will reap the rewards in the long term. I’m still faced with debt from my days as a student and I’m still slowly paying these debts back, however, I’ve set myself a personal goal to wipe out these debts over the next few years, perseverance and determination are key.

photo credit: alancleaver_2000