Lots of people are in debt for all sorts of reasons. In fact, Britain's personal debt is increasing by £1 million every 4 minutes2.

The average household debt in the UK is £8,841 excluding mortgages1. Debt can be a vicious circle. The more you owe, the more you struggle to repay it and the more in debt you become.

Dealing with debt was the overriding concern for half of the households taking part in AXA Avenue. And they proved that it needn't be as daunting as it seems. By the end of the experiment, the average household debt had decreased by 22.6% - an average of £2,712.50 per household.

The only way to deal with debt is to face up to it and take the necessary steps to get it under control. Once you start reducing the amount you owe, you then can start to make financial progress. Until then you could find yourself trapped in the debt cycle of paying only the minimum and getting further into debt.

2 Credit Action, September 2007
1 Credit Action, September 2007



What to do
The points below should help you to take the first steps. Throughout the process you need to be completely honest with yourself.


Step 1 - work out exactly how much money you have coming in each month so you know how much you have to spend
Step 6 - cutting your costs. Look at your expenses to see where you can make savings. You could also try shopping around to reduce your bills.


Step 2 - work out all your regular outgoings other than your debts, so you know exactly how much you have going out
Step 7 - make some cash to clear debts by using websites such as eBay to sell unwanted items. Taking a proactive approach can help you to clear debt more quickly than expected.


Step 3 - work out how much money you have left over to pay for your debts
Step 8 - set yourself a target of what you want to achieve in six months time or a year. It will give you something to aim towards.


Step 4 - prioritise your debts - identify which are the most important debts to pay off first. Pay off the debt with the highest interest rate first. If you are saving each month, but you are paying out more in interest than you are receiving, put the saving on hold and clear the debt first
Step 9 - get help! AXA Avenue participants reduced their overall personal debt by an average of 10 per cent, following just three months of independent financial advice.


Step 5 - make a budget and stick to it. The AXA budget planning tool is a good place to start.
Step 10 - it's good to talk. if you're in serious debt it may be worth contacting a not for profit organisation such as The Debt Advice Trust or the Citizens Advice Bureau who can give you specialised advice on various debt solutions


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