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The complete guide to managing your debts

If you’re struggling to take control of your finances, a debt management plan could help. Here’s our ultimate guide to managing debt, including the different types, tips and next steps.

Dealing with multiple debts can be a headache. Paying back money to more than one lender often makes it difficult to keep track of what’s due and when. This can leave you feeling confused and out of pocket.

Around one in five people in the UK are struggling to pay their bills 1. This means many may have to turn to alternatives to make ends meet. As such, the average UK household has more than £2,000 of credit card debt 2.

If you’re struggling to repay loans or credit cards, being in debt can have a significant effect on your mental wellbeing. This guide will take you through the ways you can get a handle on debt and take control of your finances.

What are the different types of debt?

A debt is where you borrow money from elsewhere to pay for something you want or need. They’re usually divided into two categories: secured (borrowed against your assets) and unsecured (no collateral but often higher interest). There are several types of debt, including:

Debt vs bills - what's the difference?

Bills are where you pay for something you’ve used, such as electricity or insurance, typically as part of a monthly expense. Meanwhile, debt involves paying over time for something you want to own, like a car or new phone.

Sometimes the two can coincide. For example, if you have a balance left to pay on your energy account, it’s classed as debt.

Signs you could be borrowing more than you can afford

More than 60% of people in the UK have some form of personal debt 3. But while some debt is necessary to cover your lifestyle, it’s also important not to borrow more than you can afford.

Here are five visible signs that you could be struggling with debt:

How to manage your debts

Thinking about the different amounts you owe might leave you feeling overwhelmed. However, the worst thing you can do is bury your head in the sand and pretend it doesn’t exist.

No matter your situation, it’s never too late to take action to manage your debts. And remember, you’re not alone. There are plenty of people in your situation who could use help with their finances.

Get a clear picture of your finances

The easiest way to get a handle on your finances is to write down all your outgoings and earnings. This way, you can compare both to see if you are paying more out than you are bringing in.

To do this:

  1. List out all your debts. Include the total amount due, payment dates and any other important features, like late fees or interest rates.
  2. Calculate your income. Make a note of your salary and any other earnings, such as child benefit or tax credits.
  3. Add up your regular outgoings. This could include your mortgage or rent, utility bills and subscription services.
  4. Include any additional finances. Saving up for a big life event? Due a sum of money in compensation? All these things could affect your overall finances.

Balance the budget

Now you understand where your money is going, you can begin to look at ways to make your funds stretch further. For example:

Get help with your situation

There are several organisations that aim to help people with their money. This includes debt charity Step Change, which offers free advice and resources for getting on track with your finances.

You can also reach out directly to your creditors to explain your situation. Most of the time, they will appreciate your honesty and work with you on a solution, such as giving you an extension on your repayment date.

Tips to help take control

Managing debt can often seem like a never-ending battle. Here are a few tips for staying in control of your repayments.

Create a payment calendar

Knowing what is due and when can help you organise your finances, to ensure you always have enough money in your account to cover the bill.

To do this, grab a calendar and add in the amounts due at different points of the month. Then, add when you get paid and any other earnings that crop up throughout the month.

From this, you can see how far your income stretches between payments.

Prioritise your debts

It’s a good idea to list your debts in priority order. This way, if you do have some spare cash at the end of the month, you know exactly which debt to pay towards first.

Usually, the debt with the highest interest rate should be top of the list (often a credit card bill). But you can also prioritise by amount due to tick off the smaller debts first, and free up some funds.

Meet the minimum payment

If you’re struggling to pay off debts, try your best to still meet the minimum payment. Even missing one payment can cause added late fees, which could land you further in debt.

If you’re struggling to even meet the minimum payment, try not to take out any more debts, such as another credit card, to cover this. Instead, speak to the creditor directly to ask for an extension.

Managing debts with a consolidation loan

A debt consolidation loan could help you pay off all your existing loans and combine your monthly payments into one single repayment.

How debt consolidation works

The idea is that you use a debt consolidation loan to pay off your existing debts, meaning you only owe money to the consolidation loan provider. This would mean you no longer had to make multiple payments each month, which could help you save on things like interest and late fees, as well as carving out a route to becoming debt-free.

Key considerations to make before taking on a debt consolidation loan include:

Debt management or debt consolidation?

Although they sound similar, debt management and consolidation are two fundamentally different approaches when it comes to clearing your debts.

Debt management involves speaking to the businesses you owe money to and agreeing affordable payments, whereas debt consolidation involves taking out a new loan to pay off your existing debts.

How to apply for a consolidation loan?

To apply for a debt consolidation loan with Norton Finance, begin by telling us how much you’d like to borrow and over what period.

Our loan calculator can help you get started on creating your debt consolidation plan, showing you the monthly repayments you could expect to pay if you’re successful in your application.

There are many things to think about before choosing to apply for a debt consolidation loan. Consider the drawbacks as well as the pros and take the advice of experts who can help you decide. If it seems that a debt consolidation loan could be the answer, take a look at our range of products.

1New report shows increase in the number struggling to manage their personal finances -

2Average credit card debt in the UK: statistics for 2021 –

3Debt Statistics UK Edition [2022] –


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