UK adults owe an average amount of £30,266 including mortgages, according to the debt charity Credit Action. That's an incredible 133% of average earnings.
Even if you ignore mortgage debt, we still owe £4,708 on average, through credit cards, motor and retail deals, overdrafts, and unsecured personal loans.
So we may all have an opinion on how the government should fix the country's gaping chasm of debt, but it's important for individuals to get on top of their personal borrowing too. So how do you go about it?
Face the facts
Do you know how much debt you have? This isn't as flippant as it sounds; lots of us aren't entirely sure how much money we owe.
If you're struggling to manage your borrowing then you need to know exactly what you owe before you can have a hope of getting on top of it.
Make a list of all your creditors and debts, and you can face up to the total problem.
Whether you just want to rein in your spending or you're tackling a mountain of debt, getting a clearer idea of your day-to-day costs is vital.
Avoid living from pay cheque to pay cheque and instead set out an amount you're allowed to spend each week, then stick to it.
This will help you cut out unnecessary costs and also give you a much clearer idea of how much money you have left as the month goes on.
Even once you're out of the red, this sensible habit will stand you in good stead for your financial future.
Pay the priorities
Hopefully your debt levels are manageable and you'll be able to cut back on some unnecessary spending and repay it all quickly.
If you're struggling to meet all your repayments, though, you'll need to work out which are the priority debts.
Some debts are more important than others as they could mean you lose your home, have your energy or water disconnected or even go to prison.
Read National Debtline's guest article '
How to prioritise your debts' and also ' Why some debts are more important than others' for some tips and guidance.
When you're working out how much you can afford to repay each month, be realistic. Don't leave yourself with no money for food or travel, it won't help your situation.
Sort some savings
Are you spending more than you need to on household bills? By using a comparison site like moneysupermarket.com, the average car insurance customer can save £180 a year, while you could save as much as £325 a year through switching energy providers.
Never pay more than you need to, especially if you're struggling to make ends meet.
Cut credit costs
If your credit score is reasonably good then you could potentially move lenders and find a better rate of interest.
For example, if you have expensive credit card debt then some cards offer new customers an interest-free period on balance transfers. Bear in mind that you'll usually pay a fee of around 3%.
Sainsbury's Credit Card offers 10 months interest free, while the Virgin Credit Card offers a market-beating 16 months interest-free period. With the money you save, you can pay the total debt off even faster.
Another option is to consolidate your debt into one loan - however, this will not always be the cheapest option. If you do decide to consolidate then be careful not to run up more debts using old cards or overdrafts.
Whatever you decide to do, start off by getting hold of your credit file. That will give you a clearer idea about the kinds of deals you are likely to qualify for.
Use moneysupermarket.com to
compare credit report agencies and find the cheapest place to get hold of your file. Seek assistance
If your debt is so problematic that you're going to have to negotiate with creditors, or if you simply feel it's moved beyond your control then seek help.
Although there are some companies that offer help with debt, these may not be a good idea. Many of them will charge a fee for their services, so less of your money goes on repaying your actual debt.
If possible, use a charity like
Citizens Advice, National Debtline or the Consumer Credit Counselling Service. They will help you budget, talk to your creditors on your behalf and work out an action plan.
They will also offer some support and advice at a time that can be very stressful and upsetting.
Whatever your circumstances, it's never too late to take action, so don't despair.
Staying calm and proactively seeking help will allow you to take control of your situation. It's easier to say than do, but remember that your case isn't hopeless and the sooner you act, the better it will be.
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