If you feel like your debts are spiraling out of control, it might be time to make a debt management plan. There are just five small steps between where you are now, and a much better financial place. Simple ideas like budgeting, managing your debt, and simple honesty will help you along the road to recovery.

Step One - Write Up a Balance Sheet

The first step to better debt management is honesty. Write out a summary of your current financial situation. This is a list of all of your assets, as well as all of your liabilities.

You'll also need to make a list of what your expenses are each month. Compare your income to your costs such as rent and mortgage repayments, loans, food, and utility bills. Don't forget things like going out and socializing. If your expenses are greater than your income, something will have to give.

Taking a good, hard look at your finances can be difficult, but being honest with yourself is an important part of better debt management.

Step Two - Make a Budgeting Plan

Financial problems are not always the result of spending more than you earn. It's a lot more complicated than that. There are probably many places where you can save some money. Budgeting can help you plan how you spend your money, as well as show you where you are going wrong.

First of all, write down all the money you think you spent last month. Include everything, from that latte you bought before work, the gas bill you paid, to the twenty dollars you lent a mate. It all adds up.

One of the biggest burdens to expenses are loan and credit card repayments. The interest rate on a credit card is often more than double that of a personal loan. Even if you have existing personal loans, or mortgages, it's likely you could negotiate a better rate.

Step Three - Consider a Debt Consolidation Loan

The best way to cut down the cost of your loan repayments is with a debt consolidation loan. If you have loans such as credit cards, car loans, personal debts, or interest-free store purchases, a debt consolidation loan could save you a lot of money.

A debt consolidation loan is a personal loan which is used to pay out other debts. Generally, It allows you to access a lower interest rate, which means lower repayments. Another benefit is that you only need to make one easy monthly repayment, instead of several. A debt consolidation loan is the most important step towards better debt management.

Keep in mind though; debt consolidation loans can be very hard to obtain and have approved and most lenders will require you to have a perfect credit file history and up to date (not late) payments to your existing debts.

Step Four - Remove Temptation

Once you have your budgeting and debt management under control, the next step is to remove temptation. For most people, credit cards are their biggest debt management problem. If you can't resist the urge to spend up on your card, then cut it up. Close your accounts, and don't open new ones. If you like to buy over the internet, then a debit card is a much better option.

If you find you have money left over at the end of the month, put it somewhere you can't access it easily. High-interest saving accounts are a good idea. Not only is it harder to get to your money, but you'll make a bit more in the meantime.

Step Five - Stick To Your Plan

Once you have your finances in better order, the final step is to stick to your budgeting plan. Good debt management is a great step in the direction of financial freedom, but you need to keep yourself on the right course.

Be sure not to fall into the same traps again. Stay away from credit cards and loans for things that you don't really need.

It's also important to continue budgeting. Not only will you be able to see the great progress you've made, but you'll be able to pick up on any mistakes you're making.

No matter how out of control your financial situation may feel now, it is possible to get back on top of things. By making a budget, considering a debt management plan, and being aware of good debt management methods such as budgettingyou can be on the way to financial freedom.

Summary: Does it feel like your finances are spiraling out of control? These five steps can help you better understand your financial situation. Better budgeting and debt management could be part of the debt solution you have been looking for.