A calmer approach to debt management

Having multiple repayments to make from the same income can feel overwhelming. Each debt may have a different lender with a different due date and different expectations. To begin, convert this stress into a plan. You do not need a perfect spreadsheet. You can begin with the most recent statements and a notebook.

List all your debts in one place

Make a list of the lender, the amount owed, the repayment date, the required payment, the interest rate and any fees. Also include informal debt. Check that the amount stated for the debt includes all charges that have been added to it. If you cannot understand a statement, ask the lender to provide a written explanation of what is owed. Do not attempt to calculate based on your own assumptions.

Separate the total balance from the payment due this month. A large amount owed is not always the most pressing issue. A smaller repayment that is overdue may have more immediate consequences. Store all communications, receipts and agreements so that you can reference them later.

Prioritise your basic needs

Calculate the cost of food, shelter, utilities, necessary healthcare and the transport you need in order to earn an income. These should be included in your plan before pledging every spare shilling to creditors. A repayment plan that prevents you from getting to work will not be sustainable.

Check the implications of each missed repayment. Arrears related to your home, essential services or equipment used for work may need to be addressed immediately. Legal consequences depend on the agreement and local rules. If you receive a formal demand or court document relating to a debt, seek suitable local advice as soon as possible. Do not assume a general article can resolve it.

Calculate a manageable level of debt repayments

Compare dependable income with essential costs and existing obligations. If you have an irregular income, make a cautious estimate and allow for quieter periods. See our household budgeting guide for advice on how to incorporate irregular costs without creating surprises.

If there is no money left, changing the repayment order will not fix the shortfall. Contact lenders early and ask what help or new repayment plan they can offer. State what you can afford to offer, ask about any additional charges and ask for written confirmation prior to agreeing to any change.

Decide how to use any surplus

Once essential obligations and required debt payments have been met, there are two commonly used methods for organising extra repayments. Focusing on the debt with the highest interest rate can reduce the total interest paid, depending on fees and early-repayment terms. Focusing on the debt with the lowest balance can make progress in debt reduction feel more tangible, although the total cost may be higher.

Choose an option that you can maintain while checking that no other debt is becoming overdue. Where possible, direct the money freed up by a completed debt towards the next one rather than quietly adding it to everyday spending.

Be cautious when consolidating debt

Consolidating debt can simplify multiple payments, but a reduced monthly payment may come with a longer term and a higher overall cost. Check all fees, the total amount payable and any security required. Do not turn unsecured debt into a risk to an essential asset without understanding the implications.

Before refinancing, read our questions to ask before taking a loan. Taking multiple loans to service existing debt is an indication to seek help and review your budget rather than attempting to find a new lender.

Make the next step small and specific

This week, get all of your balances together. Note the due dates and contact at least one lender if you are in danger of missing a payment. Revisit the plan periodically. Taking control involves setting reasonable expectations for promises made and making informed choices. It is not about judging yourself for needing support.

Further reading: MoneyHelper: paying off debt, saving or investing. This UK resource explains general repayment principles; local legal and support arrangements differ.