Household Finances: Four Tips for Managing Debt

tips for debt management

Debt is a difficult topic to broach for many in the UK. It can be a source of shame, despite 10 million of us experiencing it – and despite being a necessary and even useful financial product in a number of scenarios. Managing debt is much more difficult than entering into it, though, and can carry serious financial consequences for the household ill-equipped to deal with it. What are some simple tips for managing household debt?

Assess Cashflow

To properly approach managing your financial situation, you first need to understand it deeply. This means gaining a comprehensive picture of your finances, from your household income to your regular outgoings. Creating a spreadsheet can help you track irregular costs such as grocery shops, leisure costs and home maintenance. From here, you will gain an understanding of how much you have ‘spare’ each month – and where any deficits might be coming from.


Consolidate Debts

If your household already has several debts attributed to it, then the next priority is to organise them and eliminate them. Debt interest can wreak havoc on long-term financial stability, whether crippling savings potential or having a detrimental impact on your credit score. But paying them off is difficult when you don’t know which to pay off first.

The simple solution is to turn all of your debts into a single debt – that is, to consolidate them using a specific form of loan. This loan allows you to square yourself with all your existing lenders, and treat your debt as a single one to pay off. This will make calculating repayments and budgeting for them much easier for you.


For households on the property ladder, the biggest debt burden takes the shape of their mortgage agreement. Mortgages are secured and long-term debts, but still ones that can cause hardship if left unchecked. As such, remortgaging can be a smart way to re-adjust.

The present economic situation is not the most favourable one in which to remortgage, with higher rates of interest resulting in nasty shocks for many homeowners – particularly new ones. However, if you have moved to a variable interest rate on your mortgage, you may benefit from fixing it at a lower rate now before interest rates rise any higher.

Accept Debt With Care

Finally, and perhaps counterintuitively, a shrewd way to manage your debt can come in the form of accepting new debts with care. We have already touched on the power of debt consolidation to simplify the elimination of debt – but accepting new lines of credit can have positive long-term impacts, provided you have systems in place to ensure they are always paid with ample time to spare.

For example, some credit cards may have generous interest-free periods, which can be used to cover household emergencies instead of an emergency fund without negatively affecting savings plans elsewhere.