Stay out of debt

Be aware of your current situation

When you've dug yourself out of debt once in your life, you'll know how much you want to avoid going down the same road again.

We all incur some debt at one time or another in our lives so if you can't get rid of debt altogether, at least keep it down to a level where it doesn't affect the way you live your life.

It is easy to dip back into the red. Credit is all too easily available and it is often not the size of the debt that matters, merely the fact that a few unpaid bills are mounting that can result in feelings of helplessness.

Strategies for coping

1. Don't let yourself get further into debt
   You need to keep a close eye on all your finances. Just because you've torn up your credit cards you are not free from worry - make sure you keep up with mortgage repayments and any outstanding loans. Budget carefully going forward and work out exactly what your income and outgoings are. If you're struggling with repayments on loans or other debts, speak to the companies concerned as soon as possible. Never ignore letters from them and always go through your bank statements and other relevant correspondence carefully.
   
   If the temptation of having a credit card with a large limit is an issue, then speak to the credit card company and get them to lower it. Do you really need that card? If you don't and it has caused you problems in the past, then get rid of it.
2. Put some money aside.
   Even if it's as little as a few pounds a week, you'll be surprised how it quickly mounts up. Even £20-30 a month will make sure you have money set aside for any unexpected bills or expenses that you incur.
3. Don't expect everything to get better overnight
   It's a bit like a diet - you don't get fat overnight and you can't shift unwanted pounds that quickly either. Be prepared for the long haul to get back into the black and set yourself some intermediate targets - such as paying off half your credit card bill within six or 12 months, or regularly putting aside £5 into your savings account.
4. Don't assume you have to pay for advice
   If you need professional help to get out of debt, take it - but you don't need to pay for it. Remember that you can get confidential and non-judgemental advice whenever you need it. Citizens Advice Bureaux, money advice centres and other debt advice is available - have a look on the internet, in your local newspaper and in the local telephone directory for contact details. These organisations do not charge and provide help - if you're really in trouble they'll help negotiate on your behalf with credit card companies and agree repayment plans with them for you.
5. Remember that bankruptcy is only ever a last-ditch strategy
   If all else has failed and you can't possibly pay back your debts, it may be worth considering bankruptcy. Once you're declared bankrupt, you no longer have to pay back debts - this is why creditors are generally reluctant to do this as they may not get any money at all. Bankruptcy is also hugely disruptive for your life - you can't have a bank account, you can't apply for credit, and you're required to own up to every bit of revenue you earn. Even when things get really desperate, there are alternatives to bankruptcy - they're usually preferable since if you are made bankrupt you can lose your business, your possessions and even your house.