Once you have calculated your disposable income and you understand how much you are paying each month to your unsecured debts, you are in a position to assess your monthly financial position.

Simply take your disposable income figure and deduct from it the amount you are paying towards your unsecured debt each month.

If your disposable income is less than the total you need to pay your debts then you have a financial problem which you should resolve as soon as possible.

Action if your disposable income is not enough to pay your debt

The action you need to take will depend on your circumstances. You may simply need to reduce some of the outgoings you have listed which are not actually so essential.

If reducing your expenditures is impossible, then you may have to consider undertaking a more formal debt solution such as a debt management plan or individual voluntary arrangement.

What ever you decide to do, you will need to manage your money on a monthly basis. If you continue to spend more than you have coming in, then your debts are likely to get worse rather than better. For tips about how to manage your money, see "Keep a money diary".

What if you have surplus disposable income?

If your disposable income is more that the total you need to pay for your debts each month this is an ideal position.

You will need to decide whether you want to increase the payments so that your debts are paid off quicker or whether you want to use your extra funds in some other way – perhaps increase your savings for a rainy day.  If you want to save, you should make a plan to do this.