When hefty loan repayments, credit card bills and a sizeable overdraft automatically swallow up your monthly income then you are probably in an unhealthy cycle of debt. While nobody wants to be in the red, there are steps you can take to rectify the situation straightaway.

1. Prioritise

The first step is to sit down and look at all your finances to see what has to be paid now and what can be delayed until a later date. This means going through that pile of bills one by one to see what you owe and to whom.

Rank debts in order of priority. For example a secure loan repayment takes precedence over trying to pay down a credit card bill. For the short-term you can simply pay off the minimum balance to buy yourself some time.

Top of your list must be any financial agreements you have in place with a bank or service provider, so that means credit card or loan repayments, utility bills, phone bills and so on.

These take priority over topping up your phone credit as you face hefty penalties for not paying bills. Imagine the electricity being turned off in this heat, or the bank referring you to a debt collection agency to recover a missed loan repayment? These types of events would only add to your stress.

Then look more closely at the payments you can delay until you are in a better financial position.

That SR10,000 you borrowed from your parents to help you get by, for example, can wait until you are less financially strapped. Similarly, overpaying on your mortgage can also stop for now. Knowing what must be paid first will help clear the most pressing debts in a shorter period of time.

2. Keep a spending log

This will help you identify the areas where you are overspending. You can either keep a diary in a notebook or take advantage of the many personal finance apps now available – often for free – that help residents track their spending. To ensure you get the most out of this exercise, note down everything you spend, literally everything – right down to the SR1 you spend on a bottle of water. It is also worth going through your bank and credit card statements to see exactly what you have spent on in the past. For example, if you see a coffee shop brand pop up on the bill every morning, you will quickly identify that as an unnecessary expense that can go. Keep the diary for a month to help you spot any overspending trends that can be trimmed back.

3. Make cuts

Now decide what lifestyle changes you need to make to ease the debt burden. Ask yourself what you really need and what is actually a luxury. For example, a family with two cars could sell one car and take it in turns to use the remaining vehicle. Taxi fares here and there will almost certainly work out cheaper than the cost of running a car when you consider car loan repayments, car insurance, fuel and servicing costs.

4. Budget

Now that you’ve prioritised your debt repayments and trimmed your spending, you need to design a financial plan that will help you stay on top of your finances in the long-term. The simplest way to construct a budget is to look online. Numerous online sites supply budget templates that will help you decide how your monthly income should be divided up.  Again, there are many phone applications that help you budget too. They are simple to use and take out the hassle of trying to work with a spreadsheet.

If that is too time consuming, a really simple method is to write down the income you earn and then list all the regular payments that must go out first. Then leave yourself a small pot of cash for general, everyday spending – an amount that you must stick to. Finally, even though you are in debt, allocate some money for savings to help you create a buffer in case of any future job losses or unexpected personal events.

5. Consolidate

If all of the above is not enough to fish you out of troubled waters, then head to your bank and find out if they can help. A possible solution would be to take out a consolidation or refinancing loan. While borrowing more may not seem like the best solution to your woes, consolidating all your debts into one secure loan could ensure more manageable monthly repayments at better rates. But, remember, a consolidation loan is only a good idea if you really address your spending.