Practical tips to help you manage your debt

Recent data from The Money Charity reveals that the average UK household owes £65,380 in personal debt. The impact of high interest rates, inflation and increased living costs has left many feeling overwhelmed, so you’re certainly not alone if you’re experiencing money worries.

Whether it’s managing credit card debt, mortgages or personal loans, taking control of your financial situation can help alleviate your stress levels. With that in mind, here are some practical tips to help you manage your debt effectively.

Prioritise your high-interest debt

It can help to identify which debts cost you the most. High-interest loans and other credit facilities can make repayment challenging and the longer they take to settle, the worse your financial situation and your anxiety can become.

If you can, pay more than the minimum monthly payment on these debts, as this reduces the interest you’ll pay over time. For lower-interest debts like student loans, consider maintaining regular payments but focus more aggressively on those higher rates that compound rapidly.

Consider debt consolidation

If you’re juggling multiple debts, there are options that could allow you to simplify the process. Debt consolidation involves taking out a loan to pay off several smaller debts, transferring the amount owed to one monthly payment. This approach works best if you can secure a lower interest rate than you’re currently paying. 

However, it’s crucial to check whether the long-term cost will actually reduce your burden​. For example, although the new loan may offer a lower monthly payment, it could be stretched over an extended period, meaning you pay more in interest overall. It’s worth consulting a financial advisor to explore whether this option will work for your particular situation.

Understand your rights and seek professional advice

If your debt feels unmanageable, it’s important to understand that help is available. In the UK, the likes of StepChange or Citizens Advice offer free support and guidance. According to the former, more than 16,000 people sought debt advice in April 2024, a testament to how common these struggles have become​.

You also have legal rights when it comes to debt collection. If you’re struggling to keep up with repayments, creditors are obligated to treat you fairly, and there are formal procedures they must follow. Understanding your rights, including protection from harassment or unreasonable demands from creditors, is critical to ensuring you can manage your debt with dignity.