Debt. It’s something we’re all familiar with to some degree, be it a missed payment on your personal loan or a default on your mortgage. According to The Office for National Statistics, the nation as a whole is in debt to the tune of several billion pounds, £152 billion to be exact, and this figure increases by more than £440 million each day. While there’s nothing we can do as individuals to ease government debt, there are ways to decrease or avoid our own personal debt.

Avoiding debt altogether isn’t as simple as it sounds. Even one missed payment on a bill, credit card or loan can set you back and make it difficult to catch up again. There are, however, certain steps you can take to minimise the risk of this happening, and manage your income better:

  • Set a household budget. It might sound obvious but it’s surprising how few people actually do this. Having a concise list of all incomings and outgoings in your household will put your finances in black and white, and tell you exactly how much disposable income you have left over. This could then be allocated to luxuries in order of priority; is the new pair of shoes you want more or less important than having takeaway on a Friday night?
  • Keep receipts of your purchases to keep track of your spending. This goes alongside the previous point; if you see there’s something you’re buying on a regular basis, add it to your list of outgoings. It’s also a good idea to keep your food shopping receipts so you can see if you’re needlessly spending money on foodstuffs that aren’t getting eaten.
  • Remember that disposable income does not have to be spent. It’s worthwhile keeping a portion of it aside each month for things like car tax or your MOT; something that, as a lump sum, can be a large chunk of your finances, but if planned for will barely be noticeable. It’s also reassuring to know that you have a little money set aside for emergencies.
  • As much as possible, avoid taking out any forms of personal loan, credit card or buying anything on hire purchase. These are some of the biggest debt traps ensnaring people today, but they’re also easily avoided with a little willpower. If you like to buy things online (food shopping online can save you pounds because you don’t tend to buy on impulse) then think about getting a pre-paid credit card rather than the more traditional kind. These work like pay as you go phone cards – you ‘top-up’ the card with your chosen amount, then use it as you would any other credit or debit card, spending just as much as you put on it.
  • Take a good look at how much you spend per week or month on your services. Your phone, internet and utility providers may not be the cheapest available, and it could be worth looking around to see about switching to a cheaper deal and freeing up some cash.

Often, simply changing your spending habits can help you manage your money better. Try keeping a spending diary for a month to see if there’s anything which could be costing you money. Itemising not only your purchases but also the mood you’re in when you buy them might sound pointless, but it’s amazing how many people get into debt purely because they spend money when they’re bored or depressed. You may start to see a pattern; there’s nothing on TV so you go online and start looking on eBay, or an argument with a friend sends you off for some retail therapy.

As with any habit, breaking it is a matter of finding something less damaging to replace it, or removing temptation in the first place. If you’re an eBay addict, try blocking the site on your browser for a while. Likewise, if you hop in your car and head for the nearest retail park when you’ve nothing else to do, get someone to hide your car keys or your purse/wallet. A little drastic perhaps, but techniques like these can really work. Once you get yourself out of the habit of needless spending, you could be surprised at how much spare cash you actually have.

Louise Tillotson is a financial writer for, a web based comparison site in the UK.