6 min read

Your step-by-step debt action plan: Step 3

Hannah Salih
22 March 2020

Here, we're tackling step 3 of our 4 step debt action plan: recover from debt and stay in control of your money for good.

Step 3: Stay in control of your finances

As well as patting yourself on the back for what you've achieved so far, there's plenty that you can do to develop good habits and prevent yourself from falling back into old ones. Here are our top tips to help you stay in control and enjoy life.

To help you reach your goals and take control of your debts we’ve broken the process down into 4 manageable steps, giving you easy to follow to-do lists to help you master your money. If you missed step 1 or step 2, check those out first for tips on working out where you stand and for paying down your debts.

Keep using your budget

We know what you're thinking. 'Make a budget' - how groundbreaking. But it's honestly one of the best ways to make sure you always feel in control of your money, rather than feeling like money controls you. Hopefully, you’ve become a master budgeter after following our tips to pay down your debts in step 2. Even if you haven’t, there’s no better time to start than now. Your budget will help you stay on top of your money, know exactly where it all goes and even allow you to set (and more importantly achieve) any personal goals.

Read this quick guide for our top tips on creating (and sticking to a budget).

Keep tabs on your credit file

If you're recovering from debt and have lots of missed payments or a court settlement on your credit report, you may not be able to get the best offers on credit just yet.

But don't worry, there's plenty of things you can do to repair your credit score. Try to spend little and often on a credit card. If you treat it like a debit card - only spending money you know you have - then you'll show lenders that you can now manage credit like a pro.

As you recover, so should your credit score - this will be a great way to see some positive change over the longer term and it will also help you to know your options should you need new financial products.

Read our 10 steps to a great credit score guide to give yourself a steer in the right direction.

See your credit score and keep track of your progress with ClearScore

Start saving

Consider future life events - buying a home, kids going to university. Let these events influence your priorities, savings, and overall money objectives, rather than accumulating unmanageable debts for things you don't particularly care about or need.

Be a savvy consumer

Know what you’re buying and why. Make sure you’re always getting the best deal by doing some research and not making impulse buys.

Make sure you’re getting what you deserve - stay on top of changes to benefits and check your tax code if you change jobs or have changes in employment income.

Don’t forget about employee benefits, such as free medical insurance and travel discounts. It’s easy to forget about everything that’s available especially if you’ve been working for some time.

Consider the impact of borrowing

The majority of us need to use credit from time to time to fund big purchases, and when managed well this is normal. But if you've struggled with debt in the past you may want to go slow with credit to begin with.

If you do want to borrow money again in the future, consider what you can afford, why you're borrowing and whether credit is a good option for you. Use direct debits where possible to make sure you don’t miss payments, and sign up for alerts from your bank so you can keep track of exactly when the money is going out.

Recognise the signs

Spend some time reflecting back on when your debt started to feel unmanageable and try to understand what triggered it in the first place.

Was it emotional spending or the pressure of keeping up with friends or something else entirely? If you can recognise what led to the spending habits that first got you into debt, you'll be better placed to nip them in the bud before they become a problem.

If you feel like you may be slipping back into your old ways, there's no harm in reaching out and getting some help.

Continually improve your relationship with money

Building up a healthy relationship with money takes time and, just like with any relationship, there are going to be ups and downs.

If you've been dealing with difficult debts, think of it like a rough patch: debt doesn't have to define your whole relationship with money, just as debt doesn't define you.

The key thing is to learn from the past and work on developing better and more sustainable money habits for the future.

Missed steps 1 and 2?
Step 1 is all about working out where you stand and listing your debts. Find step 1 of the debt action-plan here. Step 2 is all about making a plan to pay down those debts - it's packed full of tips and tricks to get on top of your debts.

Ready for step 4? You’ve come so far in your debt journey - don’t stop now!

by Hannah Salih

Hannah reads all the finance info on the web so you don't have to. She knows all there is to know about your finances but still spends all her money on brunch. 

ClearScore exists to make your finances simple.
We offer a free service where you can handle everything to do with credit in one place. In your ClearScore account, you can see your credit score and the full details of your credit report. Your credit cards, mortgages, mobile phone contracts, loans, overdrafts and utilities all on the record. Our goal is to make ClearScore as simple, calm and straightforward as possible. Money is stressful enough.