Top tips for handling debt

Getting out of debt

• Don't panic.


• Take your head out of the sand. Don't think that just because you don't open those bank statements or threatening letters the problem will go away. It won't. It'll just get worst.


• Don't rush into anything. Don't think about taking out extra credit (debt) yet. Remember that no one ever got their way out of debt by taking out more.


• Make a cup of tea (how British!), sit down and open all those letters you've hidden around the house. Make a list of exactly how much you owe, and to whom. This part is going to be really scary, but put aside an evening or two to do it. Keep reminding yourself that the debt isn't getting worse by writing the figures down, it's getting better because it means you're starting to get a hold of things.


• Try and prioritise your debts. Council Tax, Income Tax and National Insurance debts are the bad ones. Next come things like rent and mortgage. You need a place to live, but if that new flat screen TV gets repossessed it's not the end of the world.


• Make a budget. How much do you have coming in? How much do you have going out? How much do you spend of food? How much are you being charged in interest?


• Are you entitled to any extra benefits? Find out.


• Once you've got all the figures, give the snowballing calculator a go.


• Remember you are not alone. Have a look around some of the message boards such as The Motley Fool or Money Saving Expert. There are a lot of people there who can offer advice and support.