Tips to get out of debt

Is debt creeping up on new parents while they’re (not) sleeping?

With the lifestyle changes that parenthood brings, it’s easy to see how new mums and dads can get financially disorientated. Surely we can be forgiven for a little overdraft here and a little store card balance there while we’re raising the next generation? But just like our little bundles of joy, bundles of debt tend to get bigger and bigger.

Debt tips

You think you’re doing fine but you might be brewing a serious financial problem if you agree with any of these:

  • You don’t know how much you owe or wonder where your money goes.
  • You avoid reading bank statements and hate talking about your finances.
  • You dip into overdraft most months or you’re buying groceries on credit.
  • You can only manage to make the minimum repayments on your store cards

If any of these sound familiar it could be time to start working your way out of debt. Here are some ideas to help:

1. How much do you owe?

Write down all the companies you owe money to and how much you owe. When you total up your debt, you’ll feel a surge of panic. Resist it. And avoid any knee-jerk reactions, and take time to think before you take any action.

2. Prioritise your debts

Make a note of what each debt is for, mortgage, rent, council tax, credit cards etc, and rank it in terms of what will happen if you don’t repay. Some consequences are worse than others: you might put your mortgage top for example since repossession of your home is probably your most dreaded outcome. Then simply work your way down the list, allocating your repayments to the most ‘important’ debts first.

3. Talk to your creditors

Explain your situation. Most companies prefer to get paid slowly and surely, rather than not get paid at all, so suggest a sensible repayment schedule you know you can manage.

4. Work out tax and benefits

Check that you’re getting any benefits you’re entitled to including Statutory Maternity Pay, Child Benefit and Tax Credits. If you’re already back at work, lobby your employer to join a Childcare Voucher scheme. It costs next-to-nothing for them to sign up and you’ll save on nursery or childminder fees.

5. Make shopping around your new hobby

Cut to the chase and start with the biggies – mortgage, groceries, utilities and car. Then:

  • Work your way down to the day-to-day items like petrol, nappies and food.
  • Become a voucher vulture. There are more offers around in a credit crunch, as retailers fight for your business, so keep an eye out. And help make family life easier with the latest competitions and offers from Bounty.
  • With Kidstart you can save for your child’s future without it costing you a penny! Find out here how you can turn every day shopping into savings for your children.

6. Get expert advice

Get in touch with one of the free debt advisory services.

IMPORTANT NOTE: This feature is for guidance only and is not intended to be a substitute for professional financial advice.