One of the most challenging aspects of managing your personal finances is knowing how to control debt. It’s very tempting to start borrowing – how else can you survive if your salary remains stagnant but the cost of living continues to skyrocket? It’s also hard to maintain a frugal lifestyle when today’s society places a high value on material things.

Many people think that the quickest solution to having insufficient funds to buy what they need or want is to get a loan. While short-term borrowing might temporarily ease the immediate situation, it usually starts a long-term problem that is hard to resolve.

Wouldn’t it be great if there was a simple manual to guide you on the appropriate strategies to manage debt?

This week, I compiled six valuable sayings to help you to remember some important principles about borrowing money. There is a lot of wisdom in these clever adages, and reciting them can be an effective way of memorising the underlying messages about debt.

If you’re thinking about borrowing, here are three sayings that can help you to avoid unnecessary debt:

“A man in debt is caught in a net” – English adage

Message: Don’t spend excessively just because it’s easy to get money to borrow. Just like unsuspecting insects that fly aimlessly into spider webs, many consumers get ensnared into debt traps by their careless spending habits. Easy access to payroll loans, hire-purchase deals and credit cards have lured many people who were normally sensible spenders into depressing financial ruin. Just say no to debt you don’t need.

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“Nuh put yuh cap whey yuh cyaan reach it” (Don’t put your cap where you can’t reach it) – Jamaican proverb

Message: Don’t borrow to finance your lifestyle. The best way to stay clear of unscheduled debt is to have an in-depth knowledge of your budget. Listing all of your essential expenses that are expected throughout the year will help you to know how much money you can use for discretionary items such as entertainment, clothing and gifts. If you want more things, increase your income to pay for them, or cut back on other spending.

“Do not be a man who strikes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you.” – Proverbs 22: 26-27 (NIV)

Message: Make sure you can afford the monthly debt payments. Even if your borrowing is for a good cause such as a mortgage or education loan, you must know if your budget can handle the extra costs of debt. Ask yourself these questions:

. Do I currently have extra income left over after paying my expenses?

. Do I have a consistent monthly income stream?

. Will my financial situation change in the future?

If you are not comfortable with your answers then it might not be the right time to borrow.
If you’re already mired in the quicksand of debt, here are three sayings to help you get out:

“A pound of care won’t pay an ounce of debt” – English adage

Message: It makes no sense to remain distressed about the money you owe; you have to seek solutions. The first step is to find out the true state of your debt situation: list your entire loan balances, monthly payments, interest rates and time left to repay. Seek assistance from a financial advisor who can help you to design a reduction strategy. This may include consolidating high interest rate loans and rescheduling the repayment periods.

“If yuh wan good yuh nose haffi run” (If you want good, your nose must run)- Jamaican proverb

Message: Be prepared to make a lot of sacrifices to change your situation. There’s no way you can continue with business as usual if you’re digging your way out of debt. In order to find extra money to reduce your liabilities, you may have to make drastic cutbacks on non-essential spending and convert your free time into income-generating activities.

“Give everyone what you owe him. let no debt remain outstanding”- Romans 12: 7, 8 (NIV)

Message: Don’t ignore your bills, they won’t go away. Some people are so pressured by their debt burden that they try to hide from reality. It’s important to cover at least the minimum on all your debts, so that you can remain current. If you are unable to pay anything, call your creditors and apprise them of your situation. Resolve that repaying your obligations is your priority; this will help you to find the resources over time to get out of debt.

So, keep these sayings in mind whenever debt is in the picture, and they will help to guide you in making the right financial choices.

Copyright © 2009 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, September 03, 2009

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl