For many of us, debt is a fact of life. If we want to purchase more expensive items like cars or mobile phones, then we can only do this with a finance agreement or a credit card.


If you take out any kind of credit agreement, then debt management can become a very important part of your personal finances. There are several examples of debt management that, if followed effectively, can prevent you from losing control of your finances. 




Budgeting effectively will form the bedrock of your monthly finances. Creating a simple spreadsheet or using an app to record your income and total up all your outgoings, instantly tells you whether you are living within your means and how much potential ‘disposable income’ (money that is left after your bills have been deducted) you have to play with.


Keeping a regular eye on your bank balance is also an essential part of this since we sometimes forget about the small purchases, and they can seriously add up over the course of a month.


Another option is to have multiple bank accounts; one with your income and direct debits and possibly your budgeted amount for food (you could call it your bills account) and another that you put your disposable income into (you could call this your spending account). If you make your everyday purchases using your spending account, then if you do overspend then you know it won’t affect your bills and at worst you’ll have to rein in your spending on the fun stuff, but you’ll still be able to afford to eat!


Pay Early


Paying early is a great way of saving money on interest payments. When taking out a loan or finance agreement, choose the shortest payment term that you can afford. This means that, although your repayments will be more, you will have cleared the debt sooner and paid less in the long run. It also makes it less likely that you will begin to stack finance agreements on top of each other.


Pay More


If you already have some debt, a credit card or finance agreement for example, and you carry out a budget exercise, then you may find that you have more disposable income that you thought. If this is the case, then increasing the amount of money you pay towards your debts is a great way of clearing those arrears earlier and avoiding unnecessary interest. The sooner you clear your debts the sooner the money you use for repayments can be used for fun stuff.


To find out more, take a look at our Debt Management Plan page

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