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Last updated on 19th of December 2019

22 ways to help get yourself out of debt

22 handy debt management tips that work! Manage your debt and forge a path to financial freedom with our proven tips to deal with problem borrowing effectively.

Whilst debt in itself isn't always a problem (think mortgages, for example), for many people, it can become a source of enormous concern. If you're struggling with problem debt, you're certainly not on your own: research suggests that there are millions of people who owe more than they can comfortably afford to repay. If you're in this position, fortunately, there is plenty you can do to improve your situation. Read on to discover our proven strategies and tips that give you the tools needed to deal effectively with persistent debt.

1. Be clear how much you owe

Although facing up to your level of debt can be frightening, it's always better to know what you're dealing with so that you can then tackle each creditor in turn. Make a list of creditors, along with details of how much you owe, the interest rate on your borrowing, amount of arrears (if relevant) and any action taken to date. Keep the list "live", so that as you make arrangements with creditors or debt gets written off, your list is updated accordingly.

2. Construct a budget

A budget is simply a summary of your outgoings and income. By writing down how much you spend on rent, utilities, household expenses and similar, along with details of your salary, benefits or other forms of income, you will be able to obtain a clearer picture of how much money you have available to spend on debt repayments. If you feel this will be difficult, remember that there are plenty of budget templates available online, as well as organisations who will help you draw up a budget for free.

3. Tackle your priority debts first

There are some debts which must be paid in order to avoid legal action, or which will result in you losing your home or being disconnected by a utility company. If you owe money to a government department (for example income tax or council tax), are required to pay fines or owe money on your mortgage or to utility companies, it's important to put arrangements in place to pay these debts first.

4. Freeze your accounts temporarily

Particularly if you've fallen into arrears with your creditors, it could well be the case that failure to pay or make an arrangement is increasing your level of debt. Many creditors continue to charge interest on your borrowing, as well as late payment penalties until you either pay or make an arrangement with them. In the first instance, ring your creditors to request they freeze your account for a week or so until you can come to an arrangement. This will usually prevent further interest accruing and give you a breathing space to reach an appropriate arrangement.

5. Make arrangements with your creditors

In most cases, non-priority creditors will be prepared to accept an agreed repayment amount. Normally, to request a repayment arrangement, you will need to write to your creditor, explaining the circumstances for your failure to be able to repay as you originally agreed (reasons for default), along with the statement of income and expenditure and an offer of a repayment amount. If your offer is accepted, your account will usually not accrue further interest or charges.

6. Overpay on your credit card debts

Although it's clear that the longer you have a balance on your credit card, the more interest you pay, were you aware that it can take up to ten years to clear a £250 balance? Overpaying on credit cards not only reduces your balance, but it also decreases the amount of money you're paying in interest. Also known as snowballing, overpaying on debts will see them begin to reduce more quickly than you might think.

7. Reduce your rates of interest

Obviously your snowballing efforts are going to be more effective if you're paying less interest on your debt each month. There are various ways of reducing interest, in order to clear credit card debt more quickly: one of which is to swap a credit card balance onto a fresh card which has an introductory 0% interest rate. Many credit cards allow balance transfers, which can be a good way of eliminating interest for a few months or years, in order to reduce your capital balance more rapidly.

8. Reduce your overdraft

Although around 13 million people in the UK have an overdraft, it's commonly overlooked when considering debt repayment. Using an overdraft almost invariably attracts an interest charge, contributing to indebtedness. Luckily, many banks also have the facility for individuals to incrementally reduce their overdraft. This can be an excellent way to clear overdraft debt with each reduction a step towards an account that stays in credit.

9. Never take out a secured loan

A secured loan is a type of lending product which uses your house as collateral against the loan. What this means is that if you fail to make repayments on the loan, you could end up losing your home. If you have a secured loan, pay it off as a priority.

10. Don't try to borrow your way out of trouble to clear debt

When it becomes apparent that meeting monthly repayments or dealing with an unexpected bill is going to be problematic, a knee-jerk reaction is often to borrow more. Unfortunately, this almost always leads to more unsustainable debt when the repayments are due the downward spiral of debt. If it's clear that your income isn't covering your expenditure, the most sensible thing to do is to look at ways of increasing the former and reducing the latter in order to achieve healthier finances.

11. Check your credit score

Unfortunately, if you've defaulted on a loan or two, or make late payments to your phone or Internet provider, you could end up with a compromised credit score. If you've tried to apply for credit and been turned down, it could well be because your credit score is poor. It's important to be aware of any problems with your credit score, so obtaining a copy of your credit history (the information on which your score is based) is essential. Several agencies provide this, including Experian, Equifax, and TransUnion.

12. Improve your credit score

A poor credit score affects your chances of obtaining better quality financial products: if you want access to lower rates of interest and competitive borrowing, a good credit score is essential. Improve yours by ensuring all the details on it are correct and keeping to any payment plans or repayment schedules which you have. Multiple credit searches can also reduce your score, so if you've been refused credit a couple of times, we recommend that you wait a few months before applying again.

13. Consider cutting your outgoings

Often easier said than done, reducing spending is one of the easiest ways of freeing up additional money to repay your debts and improve your financial standing. Going through each item of expenditure on your budget and considering ways that you can either reduce the amount you pay out or do away with it altogether can frequently result in "finding" significant sums to spend on debt repayment.

14. Review your utility and insurance providers

Loyalty rarely pays when it comes to utility companies! The most advantageous offers and lowest prices are often reserved for new customers. This means that it's worth re-negotiating your providers annually (if not more frequently), to ensure you end up with the best prices. Many people are able to knock literally hundreds of pounds off their bills by swapping providers. Comparison sites such as Compare the Market, Money Supermarket and Go Compare can all provide useful figures on your most cost-effective choice.

15. Never buy new when secondhand will do!

With online marketplaces just a few clicks away, it's almost always possible to get what you need for less by venturing into the world of secondhand goods! Look on social media, auction sites and free ad sites to see what's available near you. Alternatively, freecycle, freegle and various free sites online have goods available for zero cost. These are particularly useful for clothes, furniture, books, garden supplies and household goods. Remember that you will usually need to arrange your own transport!

16. Sell your stuff!

Selling unwanted possessions is a well-known way of obtaining some additional funds as well as de-cluttering. Whether you opt for online selling, a car boot, a stall at a fete, a garage safari or selling your goods to a second-hand shop, there's usually a way of turning a profit on your goods. Even if you think you don't have much of value, it's surprising what will sell! When it comes to how to clear debt, selling items to raise cash is a great start!

17. Have you claimed what you're entitled to?

Many people are unaware that they may be entitled to anything from additional money from central government to local grants and freebies. The Citizens' Advice Bureau can often provide further information regarding additional assistance. Alternatively, take a look at StepChange, Turn2Us or government benefit calculators to get a better view of what you might qualify. Your local council may also operate additional grants or other relief schemes, so it's worth contacting them as well.

18. You could be entitled to cut price dental and optical care

Glasses and crowns can be expensive! UK residents are entitled to access subsidised dental care if they use an NHS dentist and require treatment that's covered under the NHS funding arrangements. People on a low income are entitled to free dental and optical care at the point of delivery, often saving a considerable sum. Normally an NHS Exemption Certificate (which proves entitlement to free care), is sent out automatically to beneficiaries of certain national benefits.

19. Increase your income

For most people, the easiest and most reliable way of increasing their income is either to take on a second job or to work more hours on their existing contract. Whilst there are considerations around work/life balance, child care and additional costs which may cancel out some of the financial benefits of working, it's still often a good solution to raise some cash.

20. Just say no!

From offers of fresh credit cards through to loan offers, affordable finance offers, low-interest instalments, buy-now-pay-later plans and more, it's hard to escape the almost constant deluge of advertising from companies offering to lend money! Unfortunately, taking out credit that you don't need is one of the key methods by which people get trapped in debt. Remember that if an offer looks too good to be true it probably is, so try to steer clear of the additional financial stress which unsustainable borrowing can bring.

21. Look after your mental health

The tips outlined here and this handy summary give you plenty of useful options for beginning your journey towards a debt-free future. Unfortunately, being in debt can often be extremely stressful, contributing to a range of mental health difficulties. If you feel that your mental health is suffering, it's important to reach out for support from friends, your GP and appropriate support agencies. Remember that there are organisations out there which can provide help with mental health issues, as well as provide support to assist in dealing with debt.

22. StepChange can really make a difference

StepChange is a charitable organisation that's committed to assisting people who are having difficulty in managing their debt. Their services are free to use. StepChange can assist with anything from setting up a budget through to contacting creditors, negotiating repayment plans or setting up some of the more complex repayment options, such as IVAs (Individual Voluntary Arrangements), equity relief or DROs (Debt Relief Orders) or similar. Supportive and pro-active, Step Change is widely recognised by creditors and users as a source of high-grade debt assistance.