Anyone can fall into debt; particularly at the moment when the impacts of the pandemic and the cost of living crisis mean that more and more people are struggling financially.
Tackling your debt may seem like an overwhelming challenge, but by breaking it down into smaller steps, you can overcome it and free yourself from your money worries. Getting started can be the hardest part, so here are our 6 top tips to help you on your way to being debt-free.
1. Face the facts – make a list of what you owe
Looking the problem in the eye can be tough, but understanding the scale of your debts is an essential first step. Start by making a list of all of your outstanding debts. Make sure you note down all of the major details, including how much you owe, to who, the interest rate and monthly payments.
Take StepChange’s 60 second debt test to help you take stock of your financial situation.
2. Figure out what to tackle first- categorise your debts
Certain debts can have particularly serious consequences if left unpaid, so they need to be addressed early on. Clearing these as quickly as possible can significantly reduce the stress that debt brings you.
First of all, you should focus on any debt emergencies: any debts that have reached a point that you are immediately faced with action from the courts or bailiffs, with eviction or with having your utilities cut off.
After that, look at any priority debts, like council tax, gas and electricity bills, taxes and mortgage and rent payments. If these are left to increase, they could easily become debt emergencies, so it’s important to tackle them early on.
Finally, you should consider your non-priority debts, which could include overdrafts, personal loans and credit card or payday loans.
For more help on prioritising which debts to tackle, check out this guide from MoneyHelper.
3. See if you can increase your income
The more money you have coming in each month, the more of your debt you’ll be able to pay back, and the quicker you’ll be able to get debt-free.
Try this Benefit Calculator, to make sure you’re claiming all of the benefits that you’re entitled to.
Or, if you’re unemployed, visit our Getting into Work page for advice on finding a job.
4. Get (free!) help from an expert
The journey to being debt-free can seem scary, but it’s important to remember that you don’t have to face it alone. The best thing you can do to help you get out of debt and stay out of it, is to get professional advice.
Talking to an expert can help you to fully understand all of the options available. They can help you to make an informed decision about the best steps to take based on your situation, and support you in sticking to a plan. They can even help you talk to the organisations you owe money to.
To find free, expert debt advice near you, try this debt advice locator tool:
5. Make a budget- and stick to it!
Create a budget based on your monthly income and everyday expenses. This allows you to figure out how much you can afford to spend repaying your debts. Sticking to your budget will help you to be consistent in your repayments.
For help putting together a budget, check out this free budget planner:
While you’re making your budget, why not also see if you can spend a little less? Take a look at these tips from StepChange.
6. Don’t forget about your mental health
Debt isn’t just a financial burden, it can also be an emotional one. The stress of worrying about your debt can take a real toll on your mental health, especially if you feel like there’s no one you can talk to about it.
If you’re in debt and it’s affecting your mental health, check out our Help with Mental Health page to find free, professional mental health support. They’re not there to judge, just to listen and help you through this difficult time.