A 5 step plan for dealing with debt – with Money Clip from Natwest

Dealing with debt Natwest Money Clip

How much debt do you have at the moment?

I’m not trying to depress you – I know January isn’t really the month you want to look at your credit card statements – I’m just curious. You don’t have to say out loud, just have a think and add it up.

Are you surprised? If it makes you feel better, the average UK household debt in the third quarter of last year was £11,800, its highest in five years. As far as I know, this doesn’t include mortgages.

Does that make you feel better or worse?

My own debt is less than this – more like the £4,000 mark – although that’s me personally rather than the household as a whole. Over the last ten years I’ve made a concerted effort to keep the debt I do have under control. Going through university, living an hour’s drive away, and bringing up a toddler on my own, got me into a lot of trouble financially. It took me a long time to take my head out of the sand and actually face up to the debts, let alone pay them off. Now though I’m clear – no bad debts, no student loans left – it’s a great feeling.

As you’ll know from my recent introductory post, where I realised I only had £20.80 in the bank, I’m working with NatWest on their Money Clip project, helping people to get their finances in order. They’ve put together a series of very short videos, called ‘Money Clip Minutes’, and this one asks why household debt continues to rise, despite increases in employment levels:

So what is it that drives your debt and what steps can you take to deal with it?

I’ve drawn on my own experience, and used some of the Natwest Money Clip resources on The Telegraph website, to pull together some tips.


1 – Know where you stand

When it comes to money, knowledge really is power. The very worst thing you can do if you are worried about debt is to shove the bills behind that mirror on the mantlepiece and hope they go away.

They won’t.

The thing is that most companies, if you find yourself in trouble, will do everything they can to help, if only you tell them. Ignoring demands for payments and leaving phone calls unanswered is not going to solve anything.


2 – Increase your income

Right then, time to sit down, take a deep breath, and make a list of everything – all your income and your outgoings. It’s almost a given that it feels worse in your head than it will on paper, so be brave.

Once you’ve got the basics, you need to make a realistic plan. There are lots of different strands to look at for increasing your income; could you take a second job or increase your hours, even if just short term? Do you have anything you could sell? Could you take in a lodger or foreign students? There are lots of options, so do think outside the box with this one. If you are on a low income, there may be benefits you are entitled to too, which could boost your income. Check the Department for Work and Pensions for more information.


3 – Reduce your expenditure

Then look at where you could make savings on your regular expenses. Could you shop around to reduce your utility bills? Would it make a difference if you had a water meter installed? Would stricter meal planning help you reduce your grocery bill? Think about the little things too – a coffee on the way to work may not seem like a huge extravagance but £3 a day, Monday to Friday, adds up to over £60 a month.


4 – Prioritise your debts

You might start off by feeling a little overwhelmed, so it’s important to prioritise your debts. There are some bills, like rent, utilities, council tax and Inland Revenue payments, that are more important than others, as they have the most serious consequences or penalties attached, should you not be able to pay them. There’s no point high fiving yourself for paying off a credit card if it means you end up homeless.

Once your key bills have been accounted for, how much do you have leftover to pay off your debts? Do you have enough to meet minimum payments? If not, work out how much you can realistically afford and call or write to your creditors to explain the situation. Most people will be much happier to arrange a regular payment, however low it is, rather than hearing nothing from you. Don’t offer all your money to one creditor and don’t be put off if they say they won’t accept a lower payment – pay it anyway to show willing until you can negotiate a plan to suit.


5 – Dealing with serious debt

If you’ve taken all of these steps and still there doesn’t seem to be a solution, you may need to take more drastic action, such as an IVA (individual voluntary agreement) or even bankruptcy. These options can have serious implications on your long term finances and credit rating, so get some advice from a debt charity such as StepChange if you feel like this might be the route you need to take. StepChange also have a great debt tool to help you create a personal plan to help manage your debt.

What tips do you have for managing debt? Have you a debt management success story to share? I’d love to hear it!

Dealing with debt Natwest Money Clip

Natwest Money Clip



Images – Melpomene/shutterstock




  1. 29 January, 2016 / 9:29 am

    Good solid advice. It’s too easy to be judgemental about those who find themselves in debt when people are under so much financial pressure for many different reasons. I agree with all of the above steps to reduce personal debt. It’s not easy but it can be done.

  2. 3 February, 2016 / 2:01 pm

    These are all great tips! I have spent the last three years sorting my debts and am in a really good place now, a place where I’ve been able to save which feels brilliant. I had to spend most of my savings on my tax bill this year which was not a good feeling but at least I know I can DO it now – I spent most of my twenties thinking I was unable to actually save.

    My tip would be to take one day at a time. Getting into a good place financially does not happen overnight, but a little bit each day really does make the difference :)

    • Jo Middleton
      3 February, 2016 / 5:56 pm

      It’s a really satisfying feeling isn’t it when you finally get into a good place after having dealt with debts? Even just facing up to a debt and taking the first step to sort it out can be very empowering if you’ve been in denial.

  3. 3 February, 2016 / 4:00 pm

    I’m the worst person at ignoring my bank balance if I’m worried it might not be as healthy as it should be! All great advice here and very helpful!

  4. 3 February, 2016 / 4:38 pm

    Great post. I’m obsessed with saving money and staying out of debt, and I learnt loads about making my money go further when I was a student. Debt can be really frightening.

    • Jo Middleton
      3 February, 2016 / 5:53 pm

      It really can – I think the fear is part of the problem as it means you don’t want to think about it and sort it out.

  5. 3 February, 2016 / 8:15 pm

    Married to a banker, so I know every tiny penny of our debts! This is all such good advice, and believe me, I hear a lot of it on a weekly basis!

  6. 3 February, 2016 / 10:53 pm

    ah great tips – my debt is only around a grand so feel a bit better… but desperate to pay it off

  7. 4 February, 2016 / 10:54 pm

    I was feeling quite smug for a second and then i realised I still owe my student loan! bugger. fab tips x

  8. 5 February, 2016 / 5:22 pm

    I was also feeling pleased with no longer having debt but forgot about my student loan! some great tips! x

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