The credit crunch is not just about the willingness of banks to lend each other money. It affects each and every one of us. Over the last fifteen years we have seen an ever increasing injection of money into the monetary systems of all the major banks in the western world and with low interest rates this has created an environment of a cheap money supply.

We have all been encouraged to borrow money whether it is for cheaper mortgages, zero rated credit cards, or bank loans, all with the intentions of keep us spending and therefore keeping the major economies running.

This has resulted in levels of personal debt never seen before in every major industrial country in the world.

In the next two years the people of these major countries will be fighting their biggest battles not on the streets of Bagdad or the hills of Afghanistan. The biggest battles will be on their home front, literally. Desperately fighting from trench to trench trying to stem off the ever increasing price rises of food and utility supplies and millions of people will carry the scars from skirmishes with bailiffs and debt recovery companies.

The major battle for the majority of average families in this worldwide economy will be, not just stopping going into debt, but managing their debt.

Debt is simply a fact of life for many people. While debt can be an incredible burden, it doesn't have to be if you're willing to work toward a debt-free life. There are several simple tips you can follow to ensure that you pull yourself out of debt - and stay out of debt.

First, face your problem head on. Some people tend to panic, and understandably so, when it comes to debt and as a result ignore the problem. Ignoring your debt isn't going to make it go away nor is it going to help you: It's only going to make problems worse.

Start by sitting down and making a list of all of your debt, including the name of the person or company to whom you owe money, the amount of money you owe, and your monthly payments. Knowing how much you owe and to whom you owe money will help you get a better handle of the situation. If you are heavily in debt, you must prioritize your debts to ensure that those with the most priority - your mortgage, for example - are paid first.

The next step to working toward a debt free life is to set a budget and stick to it. To set your budget, start by listing all of your monthly expenses, including your recurring bills and debt. Your monthly income should cover all of your monthly expenses. After, and only after, you've paid your essential bills should you use the money you have left to pay down your remaining debt.

While you're in debt, you may have to cut back on some of the luxuries and only pay for the necessities. For example, rather than purchasing brand names at your local supermarket, opt for the store brand. Eat in rather than eating out. Read magazines at the library rather than purchasing them. You'll save money that you can then use to help pay down your debt. (Some experts even recommend keeping a daily spending journal, so you can see where you're wasting money.)

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