Tips for effectively managing debt

Our Money Matters report, released last year, showed that many people working behind the scenes had issues with debt – with almost a third (29%) of respondents admitting to having low cash savings relative to their levels of debt. 

From speaking to people in the industry in my role as Financial Wellbeing Specialist, I know the impact and stress debt can have on someone’s wellbeing if they become unmanageable.

Essential tips for managing dept

To help avoid debts becoming unmanageable, we’ve compiled a list of useful tips, resources and practical strategies that could help you to effectively manage your debt:

Budgeting and tracking your spending

• Create a Budget: List all your income sources (if any) and expenses, and then prioritise your essential expenses like housing, utilities, and groceries. See our Budget Planner.
• Track Your Spending: Monitor your spending habits to identify areas where you can cut back. You can do this via your budget, bank statements, direct debits etc

Contact Creditors and Lenders

• Communicate: Reach out to your creditors and lenders. Explain your situation honestly and ask for temporary relief or payment arrangements.
• Negotiate: Some creditors may be willing to lower interest rates, waive fees, or extend payment deadlines. Some may also have their own support available.

Explore Government financial assistance

• Unemployment Benefits: If eligible, apply for statutory benefits. These can provide temporary financial support. You can also use our online Benefit Checker to ascertain your entitlement – you can work and still be entitled to some support. 
• Social Services: Check if you qualify for other government assistance, such as food stamps or housing subsidies through Money Helper. Statutory help can be harder to navigate when freelancing or if you’re self-employed. 

Prioritise debts

• Essentials First: Focus on paying essential bills like your rent pr mortgage, utilities, and groceries. MoneyHelper’s, Bill Prioritiser, is useful for this. 
• High-Interest Debts: Prioritise debts with high interest rates (e.g., credit cards) to avoid accumulating more interest.

Review and cut non-essential expenses

• Trim Discretionary Spending: Cancel subscriptions, reduce dining out, and limit non-essential purchases.
• Sell Unused Items: Consider selling items you no longer need to generate extra cash.

Seek professional advice

• Credit Counselling: Consult a credit counsellor to create a debt management plan, this can also be available via a Citizens Advice Bureau or through debt management charities such as StepChange.
• Bankruptcy: If necessary, explore bankruptcy options. You can consult with an advisor or support worker for guidance through the Government.
• Grants: You may also qualify for support from other charities, Turn2Us have a Grants Search tool, where they can match you to grants for which you may be eligible.

Emotional wellbeing: staying positive and seeking support

• Stay Positive: Managing debt can be stressful, but maintaining a positive mindset is crucial.
• Seek Support: Talk to friends, family, or a counsellor. You’re not alone in this situation. Use our services: Call our Support Line on 0800 054 0000 and find out more about how we can support your Mental Health and Wellbeing.

Remember that financial challenges are temporary, and with careful planning and persistence, you can overcome them.