What are the best ways to deal with debt?

Being in debt can be frustrating and lonely, it's something that people donít like to talk about as it's seen as awkward or uncomfortable to open up about.

The problem with this is that there is the temptation for people who are in debt to bury their heads in the sand and try to forget that the problem exists. This just makes the debt worse because the longer it is left, the bigger it often becomes, and the issue escalates.

Here are some tips to improve your situation, which will hopefully make a difference to your financial life.

Speak to everyone you owe money to

Donít ignore the people you need to pay back. If you are struggling, donít just make no attempt to pay your debt, try to come to an arrangement with loan companies, credit card companies, or whoever you owe money to.

Many of these companies will set up plans for you to pay back less, perhaps over more time. They will just want their money back and would normally rather you paid small amounts back than nothing at all. Contact them and ask if there is an arrangement you can come to, explain your situation and why you are having difficulty making payments.

Cutting credit cards

Let your family know

Hiding debt issues from your family will not make matters better in most cases. They will probably find out in the end and are likely to be be more unhappy that you didnít tell them in the first place.

At least if you tell them, you will have someone to talk to and share your problems with. That can often help more than keeping it all to yourself and you might find it a relief.

Budget

You need to know exactly what money you have coming in and precisely how much you have coming out. When you do this you might be able to see areas in your finances where you can make savings. Being tough with yourself is the key to this, you will have to cut out any luxuries whilst you are going through a tight money period. Your future self will thank you for this when you get yourself back on your feet financially.

Can you cut common expenses by doing things like buying cheaper food, cooking for yourself instead of eating out, or making your own coffee instead of buying one each day? If you can make small incremental savings they could add up to a significant saving which will help your finances become more stable.

Set up regular payments

If you can, set up standing orders for any loans or credit cards you have if you know you are not good at making regular payments. Sometimes the temptation is there not to make a payment, even though you have the money and that payment would help reduce your debt. A standing order will take the decision out of your hands as it will automatically come out of your bank account.

Think carefully before you make decisions

When youíre in debt sometimes it can be tempting to find a quick solution to a problem, such as taking out another loan to consolidate your existing debt. The problem with this is that you could just be adding to the debt you have and actually borrowing more and paying more interest.

Think about the various solutions that are available to you and talk to Citizens Advice, who will be able to guide you in the right direction.