Debt Awareness Week: tackle your debts today

It's time to face your debt problem.

The end of January can be a very testing time for many people’s finances. Christmas credit card bills are landing on the doormat, many of us are still waiting for our first pay cheque of the year and your financial outlook may be as gloomy as the weather outside.

As we launch our second annual Debt Awareness Week, we’re encouraging people to start tackling those debt problems and seek advice as soon as possible if they’re struggling. But even if you’re ready to face up to your finances, you may not be sure where to begin.

The importance of a budget

Our latest research found that over 21 million Brits do not have a household budget, and a further six million have one but do not stick to it.

Of course, simply having a monthly budget and trying as hard as possible to stick to it will not solve all your debt problems. Most of the people who contact us for help have fallen into debt as a result of a sudden change in circumstances, such as job loss, reduced hours at work or relationship breakdown – things that can’t be planned for. But by drawing up a comprehensive budget with a list of your incomings and outgoings, you will be able to get a full picture of your financial situation. That's a crucial step in dealing with your debts.

Drawing up a budget is one of the key steps contained within our 7 Days, 7 Ways campaign, aimed at helping people to get control of their finances by following one advice tip each day for seven days.

Rather than being overwhelming, these bitesize chunks of information will guide you through the process one step at a time. By the end, there’ll be light at the end of the debt tunnel.

Get on top of your budgeting with Track

Don't ignore your bills

The first step in dealing with your debt is working out exactly what you owe, and who to. To do this, you need to open all your bills and statements – something that many people find incredibly difficult. Our survey found that 13% of people don’t open their bills, statements or correspondence from creditors immediately. Of those not opening their bills immediately, 17% feared collections or enforcement action, 14% were afraid to know the full extent of their financial position and 12% were embarrassed about their financial position.

Not dealing with this correspondence led to even more negative feeling – many of those who said they don’t open their bills immediately were left feeling worried (26%), helpless (17%) or frustrated (11%).

One of our clients told us: “I associated the opening of a letter with bad news, because it was only then I would know how much I really owed.”

More credit isn't the answer

Other steps towards dealing with your debts include maximising your income – could you cut down on what you spend, whether that's on your energy bills, your mobile phone or your mortgage. Perhaps you could look at ways to boost the money coming in. There are plenty of articles here on lovemoney.com that could help you, from doing a little extra work in the evening to how to sell successfully at a car boot sale.

We’d also advise heavily against taking out further credit to pay off your debts. It may seem like a solution in the short term, but think about whether you’ll actually be able to pay off those loans when the end of the month comes.

If the answer is no, then interest and charges could build up, leading to even more debt and a spiral that’s difficult to escape.

For advice on dealing with your debts, call StepChange Debt Charity on 0800 138 1111 or use our 24/7 Debt Remedy tool.