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10 Debt Free Tips

A forecast by the Office for Budgetary Responsibility estimates that UK household debt will reach 182% of disposable income by 2019. That’s 13% higher than it was at the previous peak in 2008, just before the financial crisis.

If you’re struggling to take control of debts, you are not alone. According to a recent report by the TUC and Unison, the number of families with problem debts has risen to 28% over the last three years, with 3.2 million households struggling financially, compared to 2.5 million in 2012.

To help you become financially stable in what looks set to be a difficult economic period, read our 10 top tips to see how you could become debt free.

  1. Face the problem If you’re struggling, don’t bury your head in the sand - ignoring bills and statements will only make a bad situation worse. You need to understand the scale of the problem before you can start making the necessary changes that will help you become debt free.
  2. Make a plan Work out your total household income and your expenses, including treats along with essentials like your mortgage and utility bills, to see how much money you may have left over to reduce your debts. Hopefully there will be some areas where you can make savings.
  3. Get your outgoings in order Put your outgoings in order of importance. Essentials for keeping a roof over your head, like mortgage payments, council tax and any secured loans need to be paid first. Next come utility bills, groceries and other debts. Luxuries like cable TV, going out and holidays come last - if you have no income left to cover these, they will have to be scrapped.
  4. Identify where you can save It is easy to fritter away a fortune without even noticing - a £4 coffee on the way to work every morning doesn’t seem like much, but it amounts to over £1,000 a year. Cutting out non-essentials, like by making a flask of coffee and having a packed lunch every day, car sharing and cycling instead of going to the gym will help you pay off your debts without further borrowing or expenses.
  5. Don’t miss payments Late payments and exceeded credit limits lead to expensive charges and additional interest fees. Direct debits are an easy way to ensure payments go out on time, as long as you have enough funds in place. If you think you will miss a payment, let them know – you could get a payment holiday or reduced instalments.
  6. Reduce your interest charges Cutting the interest paid on loans, credit cards and mortgages will make your debts cheaper and quicker to pay off, whilst giving you more money to clear other balances. Look to see if you can consolidate loans onto a cheaper rate, transfer credit cards onto a 0% rate and move your mortgage onto a more competitive deal.
  7. Avoid borrowing more The aim of this game is to clear your debts, not add to them. The only reason to take out another loan is to pay less interest than you currently are, or to reduce your monthly outgoings to a more manageable level.
  8. Save on bills Besides your mortgage or rent, your household bills are probably your biggest monthly expense. See how much you can save by changing your energy supplier, giving up satellite TV for Freeview and reviewing your current mobile, landline and broadband packages. Getting a new quote for your buildings and contents insurance through a different provider is another way to make savings.
  9. Use savings to pay off debts These days the interest you make on savings is relatively low, especially when compared to the interest charged on debts, so make sure any money you manage to save on bills and luxuries is put straight back into clearing what you owe as quickly as possible. There will be plenty of time for saving up for treats when you’re debt free.
  10. Stick to your guns Once you start following these simple steps to financial freedom, you need to keep going. Yes, it will sometimes seem like hard work, and you will feel like you still have a long way to go. But stick to the plan and you will start to feel the benefits, and your debts will become much more manageable and, in time, will disappear.


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