How to get out of debt

how to deal with debt

how to deal with debtIf you’re feeling anxious and stressed about your finances, you’re not alone. Last year, YouGov conducted a survey on behalf of the IFP and National Savings and Investments, and the results were astonishing.

Apparently two thirds of women and more than half of men worry about money always or most of the time.

Presumably these people are not worrying about having too much money. This means that the majority of the population at any given time are either worrying about debts they already have, or worried about falling into debt.

What is debt?

According to the Oxford Dictionary, the definition of debt is “a sum of money that is owed”.  Debt is part of our lives, and there is nothing shameful about it.  Controlled borrowing as part of a financial plan is normal.

You are in debt if you have a mortgage on your property, or as soon as you pay for something with a credit card (even if you do repay it at the end of the month).  Credit plans are everywhere, often without people even realising it – for example if you pay for your household insurance on a monthly basis, you have signed up for an annual credit agreement.

However, when we talk about ‘being in debt’, most people mean that they have uncomfortably large amounts on credit cards and loans or outstanding bills and outgoings that are amounting uncontrollably.

Why are you in debt?

People get into debt for a multitude of reasons, and many of the following circumstances can be beyond our control:

  • Unemployment
  • Illness
  • Unexpected essential expense
  • Change of personal circumstances resulting in reduced household income

If your debt is under control

If the monthly payments are within your household budget, you could set some goals:

  • Keep a log of your payments, and watch your debt reduce.
  • Never miss a payment.
  • Shop around for cheaper credit, and if you manage to reduce your minimum monthly payments, continue to pay at your previous rate to reduce the debt.
  • By making a structured household budget see how much you could overpay to reduce your debt at an even faster rate.
  • If you are repaying more than one loan/credit card etc, find out which charges the highest interest. Overpay the most expensive debt first.

Is your debt controlling you?

If on the other hand, the amount of income that you are paying out to ‘service’ your debts is unmanageable, steps need to be taken.

Acceptance of the situation

As with most things in life, the sooner you accept where you are, the sooner you can start to improve the situation.  Not facing up to things can lead to them getting out of control.

It is also important to accept that switching from being heavily in debt to debt-free is not going to be easy, but it is definitely possible – and it really is worth it.

The first practical thing that you need to do is to sit down with a pen and paper, and make a list of everything that you owe:

  • The lump sum owed
  • The monthly payments (if applicable)
  • The outstanding  monthly payments (if applicable)

Secondly, you need to prioritise your debts.  For example, mortgage/rent payments and utility bills could take precedence over credit cards.


  • Talk to your creditors.  If you communicate with them they can be a lot more understanding than you would expect – it is in their interests to work with you!
  • Contact them before they contact you – they will appreciate it if they feel you are actively trying to rectify the situation.
  • If you explain your circumstances they may stop charging interest for a period of time, or offer you a reduced pay back amount.

Help is at hand

There are lots of organisations that specialise in giving free help and advice. National Debtline, the Consumer Credit Counselling Service, Christians Against Poverty, or Citizens Advice are all good places to start.

Stop the vicious circle

It’s easier said than done, but the best way to turn the corner on debt is to break the habit of using credit as the answer.  If nothing else, make a decision to stop taking on new debt, and you could be surprised how quickly things can resolve themselves.

Henrietta Oxlade is an Independent Financial Planner with Radcliffe & Newlands and MyFamilyClub’s in-house finance sage! She has been advising individual clients since March 1988, which is why many of her clients consider her part of the family. If you want to contact Henrietta, email us on [email protected] and we’ll put you in touch.