It's time to face up to debt, and decide how best to pay it back

More and more people every year have trouble making ends meet and covering the most essential household bills. This Christmas, more people than ever before have also taken out payday loans as a last resort and opened store card accounts.

Money troubles don’t go away by themselves, so if you’re getting into trouble, act quickly and seek advice about how to deal with it. January is generally a bleak month anyway - once the sales are over - but avoid making extravagant or unnecessary purchases, and keep an eye on all the essential spending you must do (food, travel etc) and see whether you can make any savings there.

Draw up a budget of what you need to spend, both weekly and monthly. Be realistic, and factoring in a sum that will allow you to enjoy yourself, even if quite small, can be a good idea as it will make the process of paying off debt slightly less daunting and will keep your spirits up as you enter a period when you’ll be making do with less.

Schedule when you’re going to repay your debts, with the highest priority given to debts or payments for which non-payment could result in the loss of your home or essential services (such as utility bills). Next up are payments which carry the highest interest rates, as not paying off can see your debts grow more quickly. Be realistic with your repayments and not borrow any more money until you’ve repaid your existing debts.

You should stick rigidly to your budget.

Many people will rely on credit cards to get themselves through the expensive Christmas period, and with any luck they’ve found themselves with a 0 per cent introductory deal that will give them a bit of time to pay off their purchases.

But for those who haven’t, then take a look at the rate of interest you’re paying and see if you can find better rates from a different provider, so that if you are a regular credit card spender, you reduce the risk of getting into heavier debt if you can’t pay off your entire bill at the end of the month.

Of course, many of the best rates are only available to people with good credit ratings, but even without this you could be able to shift debt to a better rate. Do research yourself and find the best deal. Balance transfer cards are very useful products for helping you get a handle on your credit card debts. For shifting over your card debts to a balance transfer card, banks are offering customers 0 per cent interest periods on the transfer amount for up to 32 months, in exchange for a transfer fee of only between 1 and 3 per cent. 

Before you address your credit cards, if you have taken out any store cards to pay for items over Christmas, then you should look to pay them off and cut them up and throw them away as soon as possible, as these carry by far the highest interest rates for credit.

If you have any payday loans, clear them. These are hugely expensive ways to borrow.

If you feel that you can’t repay your loan, or keep up with your credit card payments, then contact your provider, who will be able to set up a repayment structure for you. If you feel you can’t manage that, or its all too much, get free, confidential and independent advice from your nearest Citizens Advice at www.citizensadvice.co.uk or for further information go to www.citizensadvice.org.uk/nireland