There are times when no matter how tight a rein you put on using your credit card, your debts still pile up one after another. If you find yourself desperately transferring credit card balances or figuring out how much minimum payment to make on each credit account, you might be in more debt than you can really keep on top of.

If this is the case, you would need to take drastic action when it comes to managing your debt. One option is for you to hire a debt advisor who will then walk you through the steps of how to become debt-free. On your behalf, the debt advisor will be negotiating with your creditors for a lower monthly payment so that all your debts will be consolidated.

But what if you don't want to call in the experts just yet? Fortunately, you can prepare a personal financial statement and talk with the creditors yourself. This step in tackling your debts is a viable option for those who would like to regain control of their finances, without having to hire financial experts just yet.

Basically, a personal financial statement is a document which sets out all your monthly or yearly income and expenditure, depending on how much you earn and what your regular living expenses are. When you prepare this kind of financial statement prior to negotiating with your creditors, you can give them a clear picture of exactly where your finances are currently.

Having a personal financial statement is also a great way to start budgeting and to track your expenses, get yourself out of a serious debt situation, and help you establish an effective savings plan for the future.

Now, what are the things that you need to do when creating a financial statement for yourself? To give you an idea, here is a list of the important elements that you should include:
Your list of income (Salary, benefits, maintenance, contributions from family members, etc.)
Your list of expenditures (Mortgage or rent, secured loans, taxes, utility bills, food allowance, etc.)
Your other living expenses (Vehicle maintenance, travel costs, childcare costs, insurance policies, medications, etc.)

Once you have added together your list of income and your list of expenditures – which should be combined with your other living expenses – see how much you have left over to pay your creditors. This is what you will use to make offers to creditors. Your personal financial statement will show them clearly that the offer you are making is fair, and all you can afford.

As you create your personal financial statement, you can see which aspects of your living expenses you can cut back on. It is also possible for you to look at other ways of increasing your income by taking up a lodger, for example.

If you think that the financial statement that you made yourself is still not that detailed, go online and look for free forms that you can download.

At the end of the day, the point of making a personal financial statement is for you to have a general look at your finances. Upon doing so, you can determine what you can do in order to slowly but surely dig yourself out of the debt situation that you are currently in.

Author's Bio: 

Find a detailed guide to producing your own personal financial statement as well as advice on finding the best debt management co on the author's Debt UK website, which offers free, unbiased advice on a range of debt related issues, including debt settlement, IVAs, bankruptcy, loans and budgeting.