10 ways to get back into the black

1. Use your savings

Having debt and saving at the same time only works when your savings earn you a better after-tax return. This rarely happens, though. Offset mortgages, which use savings to reduce the mortgage amount, may cost more long-term: there are cheaper deals available on other types of mortgages.

2. Speed up your repayments

Debt costs less if you make bigger regular payments towards it. Making the minimum repayment on credit cards does not help to reduce debt. Instead, make bigger payments, as much as you can afford. Over payments on personal loans may not be possible. Try instead to save money into a separate account such as a cash Isa. Once you have saved enough into this account you can then pay off the personal loan with one payment.

3. Control your spending

Try not to live beyond your means. Living an expensive life means using your overdraft every month and surviving on other forms of credit. Keep a daily record of your spending to help you to find out where your money goes. Try to think whether you need a new item before you buy it. Non-essential spending should be at a minimum and extra money should go towards clearing your debt. Cheaper brands mostly provide the same value as branded ones, so try to stick to these where possible. Paying in cash will prevent you from slipping into too much debt.

4. Draw up a budget

Monthly budgets can help you to keep control of your finances. You can also use budgets to see where you have gone wrong, and use that information to change your habits and make cutbacks on spending.

5. Switch credit cards

You want to clear the outstanding balances on your credit cards but the interest charges are holding you back. There are cards that offer a 0 per cent introductory rate for the first six months: Virgin Money, Nationwide and Tesco, among others. This will help to reduce your credit card balance, if done properly.

6. Switch to a better bank

Some overdrafts have high interest charges: 10 per cent or more. If you are paying this much and are spending most of the time in the red, you should consider switching to a different bank. Being in debt does not mean you should stay with the bank until everything is paid up.

7. Switch energy and phone companies

Check on a website such as www.uswitch.co.uk to see which providers are the cheapest in your area. Switching could save you money, depending on your current usage. Pay-as-you-go might work well for someone who has high mobile bills. Set a limit and stick to this sum each month – it’ll cut out all those high mobile charges.

8. Increase your income

Extra income always comes in handy. Try to get a part-time job or let out a spare room to a lodger. Rental income is tax-free until £4,250 a year.

9. Sell your possessions

There is almost always someone who is willing to pay money for your old things. You could auction things on www.ebay.co.uk or rent a pitch at a local car boot sale.

10. Move in with relatives

Not such a bad idea when you’re struggling with debt. If none of your other debt solutions work out, you could move back with your parents or with another relative who wouldn’t mind having you around.