Proven steps to take control of debt burden

Peter McGahan looks at how many have slipped into the red for everyday spending and encourages us all to take control of debt.
take control of debt
The past 2 years have seen many slip into debt for consumables rather than asset acquisition.

For many in the later stages of life, the need to take control of debt may not be the biggest problem they face, but given lower than inflation income rises, adding to rising post Brexit costs, the need to stay afloat can often mean dipping into the red.

Those people are all around you and need support and help. One in six in the UK find it impossible to feed their families and put a safe roof over their heads, a fundamental failing given the extraordinarily high employment rate over the last two decades. Since the beginning of Covid-19, 700,000 more people are now classed as living in poverty. It now stands at over 15m people.

One in 10 people in the UK have no savings whatsoever. One in three of the people you meet will have less than £600.

Over the years I did my best to explain to my daughters the difference between being reactive versus proactive. If you are in control, you have much better health. And vice versa. Which did they want?

Debt can very quickly become a habit and I often hear comments about affordability of purchases based on how much it is per month, rather than the ability to buy outright. Since Covid-19, debt has been used much more for consumption rather than asset purchasing.

When you start spending your chickens (your savings) rather than your eggs (interest), it becomes a slippery slope, and soon you are in reactionary mode. Debt has perfectly normal negative psychological side effects of shame, low esteem and impaired cognitive functioning – that’s the moment you realise you’ve read the same page 10 times. This becomes a panicked negative feedback loop, and, as my late mum used to say, with a wooden spoon around the ear when I judged someone, “there, but for the grace of God go I”.

Here is the key thing to do to take control of debt and reduce it.

Understand what you are spending

You must take control, and to do so, pluck up the strength even though it may seem stressful but just do it. Remember the person/organisation you owe money to want to talk. They have a file (and lots of them) and are happy to help and get one more file off their desk, so make it easy and just give them a call. Most people you’ll deal with will be understanding. Do yourself a favour and imagine good outcomes before the call rather than spending your time worrying (negative imagination as I call it). This puts you back in control – positive feedback loop.

My mum also use to say “take care of the pennies and the pounds will take care of themselves”. It is a good thing to get reconnected to cash. Take out your monthly budget of spending on non-essentials in cash and put it in a jar (like the cheeky trips to the pub). So, when it’s gone, it’s really gone. Afterall, there is no connection or understanding of ‘tap and go’.

My advice is to write down what you spend and that is you reconnecting with your cash. You commit your spending to memory just as you would have done when you were studying. Be honest with yourself and put a highlighter on everything you truly ‘need’. Think about it. What do you actually need? If you do this, it will reshape your spending habits. Trust me.

Psychologists show we use spending to accommodate for other psychological needs which are not being met. Pay attention to those emotions and look to fix their root cause one by one. It’s you versus the credit card company and I’m sure you are more deserving.

Take control of debt

Also, taking control means looking at every expense you have to see if you can lower it. Do you remember the analysis I did a few weeks ago on life insurance? Of all the insurance providers available, the sixth on the list was 33% more expensive than the first. Imagine the cost if you are further down on that list.

Use your lowest cost of debt to repay debt. If you have a mortgage at c1.5% and a credit card at 30%, you are paying as much in one year as the mortgage over 20 years. This lowers your payments and means you can pay the capital back much earlier.

Oh, and don’t fritter your money away as all those cheeky purchases are expensive.

Finally, translate every purchase as ‘hours’ spent in work. For example, the latest ‘iphone55’, or whatever, will cost the average UK earner 61 hours of work allowing for tax. Is that really how you want to spend your time or your money?

If you know someone in debt, please support them. Kindness costs nothing. Why not share the advice in this column might help them take control of debt.

If you have a query about the content of this column or want to discuss how you can take control of debt, please call 01872 222422, email [email protected] or visit

Peter McGahan writes a weekly column for 50connect for more content like this visit our Money and Finance channel.

Last modified: August 13, 2021

Written by 2:28 pm News & Views