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To be confronted by the spectre of multiple debts that all require repayment can be extremely stressful. However, there is no need to run for the hills, debts can be ordered and prioritised, making repayments manageable and saving you money in the long-run.

The first set of repayments to address is referred to as ‘priority debts’. To identify these, look at any financial obligations that, if left unmet, could have a drastic effect on your circumstances. This may include mortgage repayments or rent arrears, where non-payment could cause repossession or eviction. Similarly, sums unpaid on council tax could have serious consequences, as you may be declared bankrupt with all its associated problems and stigma. Also check whether you have repayments to make on hire purchase loans for items that are fundamental to the daily function of your or your family. For example, non-payment of a hire purchase loan for your car could cause ructions if it was confiscated and you were reliant on it to get to work.

Once you have identified your main debt priorities, in terms of how they could impact your lifestyle, it is then paramount to assess which debts are costing you the most. This generally means looking at the APR rather than the amount borrowed, as a high APR will cost you the most in the long run. High rate debts to look out for are store cards, (often as high as 30% APR) and it is also advisable to check the overdraft rate on your bank account, since this can be costly if you continue to remain in the red. These debts maybe unsecured, i.e. they won’t confiscate your house if you fail to repay, but they can still result in an unwelcome appearance at the County Court. Repaying obligations such as a student loan may appear to be more fundamental than paying off a store card, but this type of loan is intended to be long-term and hence has a very low APR. Therefore, continue making the minimum repayments required until you are free from the more crushing terms of the store card style debt.

It may be possible to transfer debts on a high interest store card or credit card to an interest free or low interest credit card. Also consider swapping to a current account, which generally tends to have a lower overdraft rate. If you have several small debts, such as on store cards, perhaps make some one-off payments to clear the decks, giving you a much needed psychological boost.

However, it is then probably best to adopt the approach known in the financial world as ‘snowballing.’ To do this, focus all your efforts on your most costly debt until you have paid it off in its entirety, whilst just maintaining minimum repayments on all other obligations. Once your top debt has been met, you will have released cash to use towards the next liability on your hit list, overtime your debt repayment plan will gather its own momentum, as cash is freed up and the number of obligations decreases, in a satisfying ‘snowball’ effect. Don’t forget, there are many charities and organisations out there that can help if you are feeling overwhelmed by money worries, for example the Money Advice Service.

For advice on debt management solutions, look no further.