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How To Carefully Manage Debt When You’re Struggling

Debt is something we all dread. The accumulation of debt has a snowball effect of poor money management, loss of expenditure, and also heavy stress on our shoulders. As you begin your journey to try and pay off your debt and reduce the amount of debt payable, it is an important time to sit down and reflect on how you got to this point, and how to then eventually remove all accumulated debt. 

It is important to keep in mind that certain types and levels of debt are not bad. For example, most people get a mortgage to own their home and eventually sell it once the value has increased, leading to a return on investment. When discussing this type of debt, it can be used to your advantage, in comparison to debts caused by reckless spending to the point where you can not afford the repayments. Perhaps you have made the mistake of purchasing a high-cost product on a high-interest credit card and missed payments, leading to higher levels of interest.

If you are looking for the correct steps to take now you have possibly got yourself into bad debt, check out our following tips. Please keep in mind that we are not financial advisors and this is based on experience. We would always encourage readers to seek professional financial advice.


Note Down Your Current Debts 

Before you seek help or get yourself into more debt, take the time to note down what debts you currently have accumulated. This must include everything that you currently are in debt with, so take a look at any direct debits, past purchases on finance, and just about everything you can find and write it down. 

Having everything in front of you should act as a realisation as to what you have got yourself into. This will not feel the best, but it helps put things in perspective in terms of where you have gone wrong and the unnecessary purchases you have made. Keep this list somewhere handy so you have a reminder of what needs to be paid. Missed payments can look extremely bad on your credit report and bring your credit score down even further.


Decide On Your Priorities 

If you have got yourself into dangerous levels of debt, chances are that you do not have your priorities straight. Once you have taken the time to write down what debts you have, you should take some time to reflect on where your priorities lie. 

For example, if you have children, they might be placed at the top of the list. On the other hand, you might be living alone with bills and expenses to pay by yourself. If this is the case it should be listed as one of your priorities, as you need somewhere to live and food to eat. You should even write down the bad priorities that you need to review, for example spending money on designer clothing to look good. Create a separate list of bad priorities that need to be replaced with valuable ones.


Review Spending Habits 

Once you have your priorities set straight, take a look at your bank statements and see where your money is going. Highlighting separate categories of essential costs, and nonessential costs and how much of your monthly wage they take up. Just for reference, your current debt repayments should be classified as an essential cost, as avoiding these payments will simply build up the amount owed. You will likely be surprised at how much money you are spending on non-essentials that can be significantly reduced. 


Review Your Credit Report 

You are entitled to free credit reports from the top credit-reporting companies. Even if you have noted down the debts you have to your knowledge, there could be a lot that you are missing. The credit report should show exactly what outstanding finances you have, and potentially highlight any debts there that you do not recognise. If there is anything that seems abnormal, report it straight away and have it looked into.


Pay More Than The Minimum Each Month

Additionally, if you are currently paying off debts right now, you might benefit from paying more than the minimum amount required. Each debt repayment will allow you to choose how much is paid back monthly. If you have a direct debit set up to pay back your various debts monthly, you might benefit from increasing your monthly payments. Boosted payments show credit lenders that you are working towards paying back the money, and can pay more than the minimum amount requested.


Cut Back On Luxuries 

 Now that you have a detailed overview of your current spending habits and what debts are due to be paid, it is time to take action. You must live within your means and set realistic budgets that you stick to. First things first, cut out unnecessary luxuries. This might range from buying clothing to the car you currently have on finance. If you know you can live without it, stop making unnecessary payments and pay your debt back instead where you can. It might seem uncomfortable at first to change your spending habits, however, you should keep the future, debt-free version of yourself in mind.


Consider Consolidating  

Many people who are dealing with high levels of debt fail to speak up about it, and only contact professionals when it is too late. There are many avenues to go down when looking to consolidate your debts, one being seeking IVA advice. Essentially, IVA agreements aim to consolidate all of your debts into one manageable payment. Whatever your financial advisor recommends, just know that it will be in your best interest to reduce your debt and any more risk.



Overall, as soon as you feel as though you have accumulated a large amount of debt, you should start taking the necessary measures to contain any bad habits as soon as possible. Ensure that you are taking responsibility for your debts, and also seek professional financial advice to understand exactly what avenues you can go down to consolidate your debts. There are of course good and bad debts. If your debts are predominately bad, take action to ease the further damage they can cause.

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