For many people, personal debt has become an essential part of daily life. Without our credit cards, overdrafts and personal loans, most of us would be left with far fewer options when it comes to the way we spend money - and without mortgages, buying a house would be out of most people's reach altogether.
Of course, along with the benefits of credit come the downsides. Record numbers of people are experiencing problems with their debts, and many more could do so once interest rates start to rise again.
It's an unfortunate fact that many people don't manage their debts as well as they could do. But getting your finances into the best possible shape today could greatly reduce your chances of experiencing problems in the future. Here are a few tips on how to look after your money if you're in debt.
The key to a healthy bank balance is a good budget. To make sure your finances run like clockwork, you'll need to make sure you put aside enough money for all your essentials every month, leaving you with an amount that you know is safe to spend on non-essentials (or, better still, to save).
This is all the more important if you are trying to repay debt. You can probably afford to cut back on things like food and nights out if you're running short on cash, but you will need to ensure your debt payments are made on time to avoid charges and other nasty shocks.
The financial 'spring clean'
If you're repaying debt, it pays to keep a close eye on all areas of your finances. One good way of doing this is by giving your finances a regular 'spring clean' - really looking for areas for improvement, and acting on your findings.
For example, do you have any subscriptions or memberships you no longer need (gym memberships are a common one)? Have you tried switching to a cheaper deal on your energy or broadband lately? Do you regularly buy lunch when you could make it at home for a fraction of the price? All these small things can add up to make a big difference in the long run.
What should I do if I'm really struggling?
If your debts have already become a major problem, then the above advice isn't likely to make a big enough difference to make them affordable again. In this case, the first thing you should do is contact your lenders to explain what's going on.
A lot of people assume their lenders will take a hard line when it comes to problems with debt repayments, but in reality this is rarely the case. It's in your lenders' interest to get their money back somehow, so they will usually work with you to try and find some kind of 'compromise' to help you repay your debts at a manageable pace.
If this doesn't work - or you're not sure how to go about it - then it's time to talk to a debt adviser. A debt adviser will be able to tell you the best way to tackle your debts in your specific circumstances, and if necessary they can talk to your lenders about a possible solution on your behalf.
There are plenty of ways to tackle unmanageable debt, no matter how serious you think your problem is. But it's always a good idea to get the opinion of an expert before you make any firm decisions.
Guest article by Think Money: Think Debt Advice provides a wide range of debt solutions in the UK, including debt management plans, debt consolidation and IVAs.