Overwhelming debt or struggling to pay your mortgage is a depressing problem for many adults in the UK. According to Credit Action, a debt charity, if you take into account mortgages then the average UK adult owes £30,266 – that’s more than the average annual income.

Without mortgage debt, the average UK adult still owes £4,708 on loans, credit cards, payment deals and overdrafts.

As every reputable mortgage advisor will remind you, if you fail to keep up the repayments on your mortgage then you risk losing your property but many prioritise higher interest debts over and above their mortgage, so how can an individual go about getting their personal borrowing under control?

The first thing to do is know how much you owe. It is tempting to bury our heads in the sand and underestimate what we owe, but you need to know this figure so take a deep breath and work it out. Make a list of everybody you owe money to (creditors) and how much you owe to each. Then you can do something about it.

Next you need to know your income and where it goes – in detail. Stop living from one payday to the next and make a list of each cost you have to pay and where you spend your money. Once you’ve done this, you can see how much you have left.

Work out your priority payments. If your debts are manageable, then you can cut back in some areas of spending to maximise how much you have to pay off debts. If you are still struggling at this point, then you need to work out which payments are priorities. Your top priorities should be the payments that could cost you your home, i.e. your mortgage, or ones that will mean you have your energy disconnected or face going to jail.

Now you need to go back to your budget list. It may be that you can save some money on your outgoings by switching to a new provider for energy, for example. You will need to clear any debts to your existing energy provider before you can move though, hence make these a priority. You may also be able to save by shopping around when your car insurance or house insurance comes up for renewal.

For credit cards, if you have a reasonable credit rating at this point then you may be able to move to a 0% deal for a time. There is usually a 2 – 3% fee for the transfer. By saving this interest, you can pay your debt off much faster.

You could look at debt consolidation. This means taking out one loan to pay off all your creditors, but be careful – the temptation is to take a big sigh of relief and then to running up even more debt on the now freed credit cards and overdrafts. Be careful to use your budget list from earlier on an on-going basis to ensure you don’t spend more than you can afford.

If your debt is so troublesome that you cannot see how to repay it, then seek help but be sure to use either a charity like Citizens Advice or a free service as many will charge a fee. Most of all, don’t put off taking action – the sooner you take charge, the better.

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