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Tax Accountant’s 6 Step Guide To: Managing Debt

If you are totally honest with yourself, you most certainly have had a debt problem in the past. Historically, you may not have realised it at the time because, by hook or by crook, you were coping with it.

What most people consider to be the norm, making that monthly rent or mortgage payment, keeping your credit card under control, paying the household bills means less cash to do what you really want.

Adding to this tale of woe is that interest on your debts increases the burden, more often than not, faster than your ability to reduce the balance due.

Today’s Blog concerns the majority of adults in this country who are managing debt. Many have a plan and are coping admirably, with the debt mountain gradually going down. However for the majority who are struggling read on.


I know it sounds easy and it may surprise you to know. it is.


The first step is to take your head out of the sand and assess the damage. List your debts in one column, the monthly payments in a second, the interest payable in a third and finally your after-tax total monthly income in a fourth.

This by itself is the first major step in moving forward, as it’s all there in front of you and finally you are looking at your whole debt problem and not firefighting, when or if one of them becomes an issue.

Also, unless it’s completely unavoidable like that student loan, don’t take on any more debt. Do not take on any new credit or store cards and lock up/cut up the ones that you already have.


This step is optional, but may well pay dividends, especially if you’re are in arrears with the payments on any of your debts. The vast majority of financial institutions will help if asked; partly because of Government pressure and partly because of self-interest (they don’t want your loan turning into an irrecoverable bad debt).

If asked, most lenders will consider freezing your interest for a period of time or possibly extending the term and thus reducing the monthly payments.

Alternatively, you could consider consolidating your debts into one, which will usually reduce the overall interest rate. There are many reputable firms out there, including all High Street banks, who offer this service. But as a first step, you’d be as well to contact those lovely people at your local Citizens Advice Bureau. They have highly trained debt management officers who can really help. Go to:


There are two main ways to tackle debt: the snowball method or the avalanche method. With the snowball method, you pay your debts off from the smallest to the largest amount owed, which is very good for building up momentum as you’ll quickly see that numbers in column one of your plan going down fairly rapidly.

Alternatively, with the avalanche method, you pay off your debts starting with those with the highest rate. Overall, the arithmetic works out in your favour, as because you’re paying less in interest, you have more money available to pay off the capital debt.

Managing Debt


Trimming your budget may be painful at first, but reducing your debt will feel liberating.

There are many places to cut spending easily: eating out, shopping, travel, entertainment, etcetera. If there are things you can’t cut completely, find ways to spend less. Make your own sandwich at home instead of buying from the local deli, buy your clothes at Primark rather than Next, shop at Lidl instead of Sainsbury’s, cut out that early doors pint on the way home on Fridays, are just a few examples.

If you find it impossible to cut these categories any further, consider going more extreme. Get a lodger, sell your car, or move back home. These strategies are hard, and may not be possible for you (or you’re already doing them!), but every pound helps.


In addition to cutting your spending, try earning some extra money specifically to go toward your debt. Look for additional part-time work, volunteer for overtime, or sell your stuff on E-Bay.


Eradicating your debt is hard and often, painful work. It takes a lot of commitment and willpower.

This process can well take a long time, so it’s important to track how far you’ve come to keep your motivation level high and be sure to reward yourself (in a budget-friendly way!) as each loan balance hits zero.

Also remember, you’re not the only person in this predicament, talk to friends and family. It may be embarrassing at first, but to a problem shared…………

Image of David Jones Shrewsbury Accountant and Founder of Morgan Jones

If you would like more detailed information on some aspect of UK Tax, send me an e-mail and I’ll be pleased to advise further.