One of the key points of the debt program is the focus on unsecured debt. The reason is with secured debt if things go wrong, the security can be sold and the debt repaid. Unsecured debt doesn't have that fall back option and falls into 3 categories:

1. Any amount you borrow without putting up collateral/security.
2. Any credit extended to you.
3. Any service you use without paying immediately. This may include phone, electricity, water etc.

In recent times Australians have been enthusiastically adding unsecured debt onto their home loans and getting away with it due to the increase in home values. We will focus on unsecured debt and stress the need that rolling this type of debt onto our home loan should only occur when all other options have been exhausted.

An interesting saying that debtors anonymous use is the term 'debting'. Even though this is not a word, the term debting means 'to debt'. This makes a lot of sense and therefore we will continue to use it.

The 1^st step is to recognise that we have a debt problem. The 15 Questions and Warning Signs sections in Handling Debt will help. After reading those sections ask yourself the question? Do I have a debting problem? Even if it is a relatively small problem it may turn into a larger problem.

Remember no one starts in life with a debting problem. The process is usually gradual starting small and progressively getting bigger and bigger. As this can take years, there is often a lack of recognition of a debt problem.

Recognition of a debt problem is only the start. Another factor is why you got into a debt problem at all. There can be many reasons why as we are all different . A good way to determine is to look back when you first borrowed money and try and remember all the times you have borrowed since.

Have a look in your wardrobe for those expensive outfits. How did you pay for them?

What about the stuff in the garage or shed. How often is it used and how did you pay for it?

What about that holiday? How did you pay for it and are you still paying for it?

Why don't you get out pen and paper and write down say 20 - 30 of your larger purchases over the last 5 years and how you paid for them? Is there a trend? Our aim is for you over time to become consciously aware of your spending and to stop yourself from pulling out that credit card or signing onto that repayment program. The questions you would then ask are:

            Do I really need this item?

            Is there a way to pay for it without debting?

Will this purchase affect my ability to meet other more urgent and important expenses later on?

If you are still struggling to work out an underlying reason for your debting problem, consider the following:

1.      Shopaholic: Is this you? Do you go shopping when feeling down and look for that purchase to make you feel better? Unfortunately the euphoria doesn't last long and is almost always gone when the credit card statement arrives. That is if you open it up!

2.      I can't handle money: For some people money has this complicated feel to it and they back it up by saying things like 'I'm not good with figures, I'm a people person'. They seem to think only professional types like Accountants; Lawyers & Financial Advisors understand it. The fact is some of these don't understand it too well either. Sure they may earn a large income, but some of them spend it all and more in some cases.

These professionals have studied many complex subjects to obtain their degrees and diplomas. Just like you and me they never had a subject that focused entirely on money in its simplest form. The federal government is aware of the lack of financial education in this country and is starting to implement a program in our schools.      

If you can add up and record everything you spend you are able to handle money. You just need to work at it, which is why you are a member of money100.

Dress to impress: There is a saying often used in sports that applies here 'If you can't play good at least look good'. Many people use this in everyday life. An appropriate saying is 'If you are not a millionaire at least try and live like one' or another popular one 'Big Hat, no Cattle'. There are so many people out there who live by this rule.

The new car, regular holidays at luxury resorts, clothes, dining etc etc. Friends, neighbours and people who know them say things like, 'I wish we were as well off as the '______'. You know what, they probably are. It is just one family lives beyond its means and the others don't. Which one are you?

We could go on with many other examples but I hope you get the idea. If you spend less than you earn you are on the way to meeting your financial goals.

If you recognise yourself here, perhaps it could be time to face facts. Your first step to recovery from debting is to admit you have a problem. Then congratulate yourself. You have just overcome your first hurdle.

You are on the journey to recovery.

Summary

1. Focus on unsecured debt
2. Debting (Don't)
3. Recognise the problem
4. Journey to recovery (It won't happen overnight)