When debt becomes a problem

With the economy in a downturn for some time now, debt has become a worry for increasing numbers of people. Many people are finding that rising costs of living and/or shrinking incomes are taking their toll - even people who had no previous concerns about their finances.

That said, debt in itself is not necessarily a bad thing. Any money you borrow is a debt - and providing you can afford your repayments, this needn`t be a problem. Nearly all of us get into debt at one point or another.

However, when that debt becomes difficult to pay back, the situation can be worrying. If you owe money, it`s important to understand the difference between manageable debt and unmanageable debt.

How do I know if I have a problem with debt?

If you can answer `yes` to some of the following questions, then you may have a problem with debt:

• Do you frequently run out of money before the month is over?
• Do you have ongoing debts (e.g. credit cards, overdrafts) that you just don`t seem to be able to clear?
• Do you often find yourself `pushing back` repaying some of your debts until a later date?

And even if you can afford your debt repayments each month, it`s important to watch out for the warning signs.

In particular, you should aim to have at least some money left once all your monthly commitments have been covered. That includes your debt commitments, as well as other important expenses such as mortgage/rent payments, household bills and food costs. The money that`s left - while it can be spent as you wish - can also be saved, so it acts as a `buffer` against any financial emergencies that might come up.

If you don`t have much money left on a monthly basis, even a small unexpected expense could lead to debt problems - especially if you have no savings to fall back on.

What should I do if I have a problem with debt?

If you do think you have a problem with debt, getting the right debt advice is essential.

A professional debt adviser can help you to find the best way of clearing your debts - whether it`s a `reshuffle` of your finances or a specific debt solution.

For more information on a range of debt solutions, click here or contact one of our expert debt advisers on 0800 161 3516.