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Shortly after the credit crunch, UK household debt (not including mortgages) dropped sharply as lenders, with a reduced appetite for lending money, tightened lending criteria. This slowly loosened in subsequent years and it appears household debt is on the rise again. UK household debt now stands at a record £15,400 per household.

The TUC will tell you that this is because of wage stagnation and austerity and that we are at crisis levels. Other commentators will say that debt is becoming easier to come by, with more and more banks and lenders offering interest free credit, free balance transfers, low interest rates and the like.

Regardless how you look at it, being in debt is not a good thing and can cause great misery when it gets out of control. Here is an eight-step guide to getting back and staying the black.

1: Work it out: Sit down and work out exactly how much you owe and who you owe it to. Be honest or you’ll only store up more problems for the future. If your debt repayments take more than 20% of your net monthly income you are in the danger zone and must take steps to cut back.

2: Budget: Once you know how much you owe you can draw up a budget, including a schedule for repaying your debts. Be realistic and work out what you can afford to repay and still stay within your budget.

3: Use your savings: Trying to save whilst in debt is similar to building a house without foundations. Debit interest is usually much higher than credit interest. Whilst it’s important to have a fund for rainy day money, having savings whilst in debt is counterproductive. Use your savings to clear your debts. Don’t borrow any more money or take on any more debts until you have repaid what you already owe.

4: Watch your daily spending: Take a set amount of money out of the bank at the beginning of the week and give your card to a friend or family member for safe-keeping. That way you cannot spend more than you have in cash.

5: Organise your bills: Make sure you are paying all your utility bills by direct debit. It’s much easier to manage and is also cheaper as most providers offer discounts for direct debit payments.

6: Switch your utility suppliers: You could save hundreds of pounds each year on your gas, electricity, water and phone bills by switching. It is advisable to switch your energy and phone suppliers before you set up direct debits or you will end up having to change them again.

7: Switch to a cheaper credit card/loan: Try different providers and you’ll probably be able to find credit card or loan with a better rate than you’re paying now.

8: Cut up store cards: Store cards charge by far the highest rates for credit, so if you’re finding it hard to manage these debts destroy your cards now to avoid temptation.

Take control. Once you are in control, you can manage your debts and plan to get back into the black. It’ll take patience and determination, but it’s worth it. The future is bright. The future is black.


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