No one likes the D-word. It has connotations of over-spending and poor budgeting, when in fact it could be for many other reasons including student loans, redundancy or an unexpected divorce.

Dealing with debt is a reality for many of us. According to 2015 research from professional services firm PwC*¹, the average UK household will owe nearly £10,000 in debts by the end of 2016. And that figure doesn’t even include mortgage debt.

The temptation is to ignore your debt, but denial isn’t the answer. You need to know how to approach the situation and be smart about how you deal with it.

These five tips will help you tackle your debt directly.

1 Face the financial facts

Start by making a list of all your debts, putting them in order of the most serious consequence. At the top of the list will be debts affecting your home, such as unpaid rent, bills or council tax. Further down the list will be money owed on credit cards, overdrafts or hire purchase agreements.

You could try snowballing – completely clearing the debt with the highest interest rate first (whilst paying the minimum on others) before moving onto the next. Prioritising your debts will help you plan how to manage them. However, it is still important to always consider the consequences of non-repayment, regardless of the level of interest rate.

2 Work out a budget

Once you have a clear picture of how much you owe, you can draw up a budget plan. The Money Advice Service’s online budget planner^* helps you work out where your money goes each month and calculate what’s left over once major bills have been paid. This provides you with a figure that can go towards your monthly debt repayments.

3 Research balance transfers

Credit card balance transfers can help reduce the cost of borrowing. By transferring an existing credit card balance to a new lower-rate card, you avoid additional charges and clear debt faster.

If you’re confident you can pay the full amount in a limited time you could switch to a 0% credit card. Be aware of when the offer comes to an end and ensure you’re looking around to get the best deal. It can often make more sense to switch to a lower-rate credit card. These still charge interest, but generally less than you’re currently paying.

4 Take out a personal loan

As counter-intuitive as it sounds, a personal loan can help you manage debt. If you hunt around, you could secure an annual percentage rate (APR) that’s much less than that of your credit card. In March 2016, This Is Money* referenced research by Moneyfacts, which found that average credit card interest rates are as much as 21.6%². With enough time, effort (and a little luck) you may find a rate that is half that – or even lower. Overall, it can help to consolidate your debt into a single monthly repayment, meaning you have less stress and more structure.

5 Seek advice

However overwhelming the feeling of being in debt, help is always available. Get in touch with an independent, professional organisation such as the National Debtline* or Citizens Advice*. They help thousands of people every day to manage their debt.

Discussing money doesn’t come naturally to many of us and it’s never easy admitting you have a debt problem. No one is saying that managing your debt is going to be simple, but once you face up to the problem, you may be surprised just how quickly you can start making a difference.

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Sources:

¹ http://pwc.blogs.com/press_room/2015/03/pwc-uk-unsecured-debt-set-to-rise-to-nearly-10000-per-household-by-the-end-of-2016.html
² http://www.thisismoney.co.uk/money/cardsloans/article-3469629/Average-credit-card-rates-hit-time-high-21-6-APR-worst-offender-charges-three-times-more.html