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Every other advert on TV is for a loan of one description or another. The UK's appetite for debt has gone through the roof! A little debt during a boom period is no major deal, everybody is earning plenty of money, there is a general feel good factor around. However, those days are over.

House repossessions are at their highest level since the last housing market crash. Household names are going bankrupt nearly every day. The UK's trade deficit is running out of control. Consumer confidence is at a low. All these factors point towards a slow down ' yes, recession!

Now is the time to pull in your belts and stash your money away to weather the storms ahead.

The main reasons people take out loans are to pay off debts or to purchase something that they cannot afford. If the loan is to purchase an item you cannot afford, the question to ask is ' do you really need it? If yes then a loan may be your only option. If the item is a nice to have, a better option may be to follow the advice below and save up for the item rather than burdening yourself with expensive debt.

Taking out a loan to pay off debt and thinking that it is a solution is pure madness, let me explain.

The reason that you have got into debt is because you are spending more than you earn. The classic scenario of more going out than there is coming in. So you get a loan to cover the debt that has arisen. The loan pays off the debt and you get a generally warm feeling that you have sorted out your finances. However, a few months down the line you realise that you are back in debt and wonder why that has happened. Of course you are back in debt, you are still earning the same. You are still spending the same and you now have the extra loan to pay as well! So it is not surprising you have gotten into debt even quicker this time around.

You have two options:

1) Take out another loan
2) Take control of your finances

If you choose option one and get a second loan, you are heading for bankruptcy! This is because your earnings are not increasing but your spending is massively increasing as you are trying to pay off al these loans!! You can continue to get loans until the point when nobody will loan you anymore money, this is the time that most people will be declared bankrupt!

Loans alone will not resolve most people's financial issues. Unfortunately, many people hear the adverts from the loan companies talking about debt consolidation and other options and get suckered in without knowing enough to be able to decide if debt consolidation is right for them. The loan companies claim that they want to help you but actually they just want to sell you a debt consolidation package or a loan with a ridiculously high interest rate. Remember, those companies only make money when we are in debt. If you and I sort out our finances, they do not make any money.

Whether you have debts or just feel that your finances are controlling you and not the other way around, it is time to fight back!

Your finances are only controlling you because you let them. It is a bit like feeling nervous when speaking to someone who is an expert in their field, you may feel you are unable to talk on the same level and feel intimidated. However, when you are relaxed chatting to your mates about your favourite football team etc you can hold your own and are comfortable. The only difference between those two scenarios is your knowledge. When you have the knowledge and understanding, you can take on the world!

So how do you get knowledgeable about managing your finances?

I will try to share some tips with you. However, a short article like this could never go into enough detail, I will just try to explain the concepts that you need to grasp. If you do want more information, click here for my detailed Debt Reduction manual which explains in detail everything that is covered here and much much more.

So what are the core concepts?

1) Know your finances intimately
2) Decrease you expenditure
3) Increase your income
4) Play the interest rate game

Know your finances intimately

The very first thing you need to do is now exactly what money you have and where it goes. So workout your monthly income and detail the sources. Does the income come from an employer, state benefit, interest etc? Then detail out all your expenses.

Decrease your expenditure

You need to cut costs. There is always a way you can do this. By knowing all your expenses you can go through each expense and work out how to reduce it. My manual spends a lot of time on this subject and shares all the tips and tricks that I have learnt, it can show you how you can save thousands of pounds each year and gives examples of people who have done exactly that. Also, don't forget to check out the web site as there is lots of free advice available.

Increase your income

On top of reducing your outgoings you want to maximise your income. Think of ways you can receive more money each year. Again, check out the website and manual for more information. In the manual there are 9 ways of increasing your income. They include getting a job, getting extra work, your own business (this is not as difficult as you may think), getting all the allowances you are entitled to and reducing your tax

Nearly finished'

The basic concepts of improving your finances are simple:

' Spend less
' Earn more

I think just about everyone can understand that. The difficulty is how to do it. That is were the website and manual come in, they (especially the manual) step through your options slowly with examples at every step so that everyone can understand. You do not need to be a rocket scientist to understand this manual

As obvious as spending less, earn more may be, many people are blinded by the magic solutions such as debt consolidation. Don't get me wrong, I am not anti debt consolidation and sometimes it can be the right solution but often it is not. Let's think about it. With debt consolidation you are swapping lots of different debts for one big one. It seems good because your monthly payments are reduced. However, the reason the payments are reduced is because they are secured against your house and the fact you are going to spend the next 25 years paying them off.

With debt consolidation you are address the effects not the problem. The problem is that you are spending more than you earn, that is normally the reason why you are in debt. So after getting debt consolidation you are still going to be spending more as you have not reduced your spending or increased your income. So eventually you will probably need to do more debt consolidation and in extreme cases you will keep going until you cannot get anymore loans and end up bankrupt.