1. Avoid Paying Off Debt With More Debt

One of the biggest temptations faced by those in debt is to pay of existing debts with more borrowed money. Whilst this can seem an instant solution to a mounting debt problem it may not be the best possible solution available, especially as lenders are likely to charge you a higher rate if you already have considerable debts, as they will view you as a higher lending risk. The only time this should be considered is through a reputable debt consolidation company who will actually charge you less for consolidating your debt into one vast sum.

2. Be Wary Of Balance Transfers

Balance transfers have become a popular debt management strategy, but they are no long term solution. Remember that whilst a 6 month interest free balance transfer may seem tempting, you are likely to be paying a higher rate of interest once this period has expired. It is also worth noting that only the balance that you transfer is subject to the 0% interest, not any additional spending that you make on your credit card. Balance transfers are not a debt management method, they may delay debt, but can help you in the short term to get relief from monthly repayments whilst you restructure or reduce your debt or finding alternative employment.

3. Get Professional Debt Counselling Help

The Citizen’s advice beaureau provide residents of the United Kingdom with free debt related information and also have some essential links to reputable debt management and debt counselling organisations. Before you take any advice make sure that you visit www.citizensadvice.org.uk . To locate suitable organisations. Also find out if the organisation is independent of any financial or debt companies to ensure that you are getting independent advice. Also consider doing an Google search for reviews of the debt management organisation concerned and find out what others have to say about them.

4. Make Use Of Mortgage Holiday Periods Wisely

Some mortgages have a clause which allows borrowers to take a break from up to 3 months from making payments. Like balance transfers they will not reduce your debt directly but they can give you some all important breathing space and respite from monthly repayments to help get your financial affairs in order. It is important to remember however that you will continue to pay interest on your mortgage capital amount during the period of your mortgage holiday period, so interest will continue to build up. As such they are not normally a good long term debt management solution, however as a short term debt solution they may a good option.

5. Review Your Spending Habits

Whether we like to acknowledge it or not, most debt is caused by our own spending habits and one of the best debt management techniques is to look at our own relationship towards spending. If you haven’t already take time to sit down and create a monthly budget of your income and expenditures (out goings). Write this down so that you have a visual record of what is coming in and what is going out. You can then use this budget to help you identify negative spending habits and look for ways to reduce your spending. However the key with this method is then to invest the money you have saved into reducing your existing debt as quickly as possible. Remember that the faster you pay of your debt the less interest you are likely to pay in the long term which can lead to significant savings. This is arguably one of the best debt management methods available to everyone.

6. Be Accountable

One of the biggest problems with debt is that it is easily to slide into negative spending habits without even think about it. That occasional sandwich that you buy at lunch or the coffee from Starbucks that you buy on the way to work, suddenly develops into a regular habit. Whilst there is nothing wrong with this, it will severely drain your financial resources but deciding to be accountable to another person can have a major effect up debt reduction. Consider asking friends to remind you that you need to bring your own lunch when you are tempted to buy lunch out whilst at work. One of my work colleagues used to buy a star bucks every single day and she realised that this was not helping her mounting debts. She spoke to other colleagues at work and asked them help her break this negative spending habit and every time we saw her with a star bucks we would say, do you need that today. Within 8 weeks she had saved herself a staggering £120.00 per month!

7. Pay Of High Interest Debts Quickly

Good debt management relies upon you targeting debts in order of priority. The best way to do this is to start with debts that have high interest rates as these can quickly spiral out of control. Consider paying these off first and then move onto debts with lower interest rates. Of course this will not always be as straight forward but debts with high interest rates left to accumulate can quickly turn into an unbearable stress and good debt management is about staying in control of your personal finances.

8. Avoid Door To Door Lenders

Whilst it can be difficult to get credit from major lenders, this is always preferable to getting into debt with door to door lenders or loan sharks. Very often these individuals operate outside of financial systems and are usually not regulated by the financial service authority. Essentially many may be a criminal element that prey upon desperate individuals in need of a quick loan and usually people who have poor credit ratings. Whilst it may seem tempting there are always better alternatives, especially as some of the interest rates charged by these organisations can be up to 1000%! Instead go to the citizens advice beaureau in you local area or online at www.citizensadvice.org.uk .

9. Cut Up Your Credit Cards/Store Cards

This is a drastic measure but sometimes the temptation is too great to resist if you know that you can access credit. If you are already in debt spending or borrowing more is only going to make your situation worse so consider taking this measure to prevent further spending.

10. Find The Cheapest Debt Consolidation Loan

If you decide that your debts cannot be managed through cost savings, or a reduction in spending then it may be better to consider debt consolidation as a debt reduction method. A debt consolidation company will essential combine all your existing debts into one larger sum which costs you less to service as they can negotiate a lower repayment amount on your behalf. But before you choose this option shop around for the best deal like you would when grocery shopping. Do not just choose those that advertise on the television, instead use the internet to compare reviews of debt consolidation companies and find out what other customers have experienced. This debt management technique should only be entered into after seeking professional advice.

Read More Money Saving Tips

Check out some of our other free money saving articles and guides;

Debt Related: