Over 25 million Brits have admitted they’re in debt, with 40% relying on credit cards for everyday spending. The research, carried out by free credit score app CredAbility, found that a further 18% have received bad financial advice, making their situation worse.
The good news is that people can take a few simple steps to regain better control of their finances. Keely Newman, head of vulnerable customers at TSB Bank, told the Express: “On debt awareness week, it’s a good time to check in on your finances and consider how you can make small changes while you build for the long-term and the goal of becoming debt free. Support is out there – from your bank to charities like StepChange – that can help you navigate your finances and give you the confidence to stay on top of them.”
Debt consolidation
The first step people can take to tackle their debt is to consolidate it if they can. Ms Newman said: “Having multiple lenders at different interest rates can cause confusion, and you may be paying more than you need to.
“Talk to your bank about options to consolidate your finances into one monthly payment, giving you a clear goal with a set end date.”
Make a plan
Use a spreadsheet or budgeting app to track your income, expenses, and savings goals or debt repayments.
Ms Newman said: “Update this monthly and reflect on the previous month to help you stick to the plan.”
Talk to someone
If you feel overwhelmed, contact your bank to set up a manageable payment plan. Ms Newman said: “For hard-to-beat debt, help is available from brilliant charities such as StepChange and Citizens Advice.”
While these steps can help you regain control, Ms Newman shared six further practical tips for managing debt.
Mortgages
Review your mortgage regularly, using an expert, as this will ensure you are taking advantage of the best rates.
Ms Newman said: “It’s also worth reviewing whether you are in a position to pay more each month, as this helps reduce your interest payments and takes you closer to one day becoming mortgage-free. If you are struggling with debt and budgeting, or you’ve had some unexpected costs, many lenders offer repayment holidays to give you a break.”
However, this means you will pay more interest over the course of your mortgage term, so it’s important to consider this before making any changes.
Subscriptions
If you aren’t using them, cancel them. Ms Newman said: “They may seem small amounts, but if you aren’t getting value for money, they soon add up and could save hundreds over the year.”
Utilities
Shopping around means you can always consider the best deals to help cut down your household expenses.
For example, as many as 22 million households are thought to be on a standard variable energy tariff, when they could save “hundreds” of pounds by opting for a fixed rate.
Ms Newman said: “Comparison sites can do the hard work for you, or you can even talk to your existing provider to review your package and make sure it still meets your needs.”
Free debt advice
Anyone can find themselves struggling financially, but there is a huge amount of free, impartial advice out there to help you navigate your options and work with your creditors to reach affordable solutions.
Ms Newman said: “Sadly, we see some customers paying for advice and this is an expense they could do without.”
Eligible grants
Consider whether there are grants and payments you’re entitled to. Ms Newman said: “StepChange has an online benefits calculator and at TSB, our partner Lightning Reach can tell you if you’re eligible for a grant in just a few clicks.”
Build up emergency funds
It really pays to build a savings pot as a safety buffer to ensure you’ve always got some funds to fall back on – be it for emergencies or big purchases. Ms Newman said: “Many banks offer Savings Pots to help make it easier to save a little and often.”
