However, the start of the new year is often marked by financial stress.

There are the Christmas purchases to pay off, the extra entertaining, the January sales, and the holiday away.

Next come the 'back-to-school' costs for the children, who are growing and moving up a grade at school.

Where will the money come from?

Debts can overwhelm.

There's no simple way out of the problem but there is a reliable strategy to manage it.

The first step is to face the problem and analyse where you stand. Write down a list of all debt amounts.

Alongside put the interest rates you are being charged, and the payments required.

Next, rearrange the debts in order from the highest interest cost to lowest.

It is nearly always best to pay the highest cost debts first. Paying extra on them will reduce the total interest you must pay the most.

One exception is if there is a loan that is almost paid off that, once gone, will free up a significant amount of income to go to the high-cost loans.

The highest cost debt might be a credit card or retail store debt.

It is essential to find a little extra income to go to reduce it faster.

Budgets are boring but are very valuable.

Preparing one will help identify where those few extra dollars you need for the high-cost loan can come from.

The budget may show you need to cut down on coffees, take-away meals and entertainment.

Keep paying down the high-cost debt with extra payments while paying the minimum amounts on other debts.

Once the highest cost debt is gone attack the next highest with the extra cash flow freed up.

It is very important to avoid adding extra purchases back onto the debts.

If there must be debt-funded purchases pay for them on low-cost loans.

It helps to get into the habit of paying for non-essential items with cash. It feels different spending 'real money' instead of swiping a card.

When the cash is gone spending stops. You will be more careful about how you spend.

Debt consolidation can be a practical way to manage and reduce debts for some people. It involves combining debts together into one lower-cost loan.

For example, it may be possible to pay out the credit cards by increasing the home loan. If you don't have a mortgage loan a personal loan is still cheaper.

Repayment of your previous spending will be spread over a longer period, but the interest and payments will be lower.

It will be necessary to meet your lender's criteria and get their approval. Debt problems can be managed with courage and discipline.

Russell Tym is a 'financial identity' in the central west of New South Wales. A regular columnist for the Central Western Daily, and the Western Magazine for many years, Russell also presents two radio shows on personal finance, investment, and financial planning.