The holiday season is almost upon us, and for many people it can be a time when those financial worries can really begin to pile up. Whether it is the pressure of present buying for friends and family or simply cash flow problems that really start to pinch over the holidays, many people may find themselves going deeper and deeper into debt at this time of year.

This is an issue that, when it gets out of control, can become hugely stressful. The festive season can encourage us to adopt an attitude of ‘pay now, worry later’ – but it is clear that this is ultimately an unsustainable approach to take. When January comes, the cold hard reality of unmanageable debts can really start to hit home. So, is there a more healthy relationship that we can have with debt? We think there is.

Clearly, it is important to acknowledge as a starting point that while uncontrolled levels of debt are most certainly not a good thing, there is still a place for debt if it is managed properly. Having a responsible relationship with debt in this sense really comes down to sticking to just a few very basic principles: having access to lines of reliable and trustworthy credit, using them only when absolutely necessary, and then paying them off promptly.

Settle early, settle often

This final point is incredibly important, especially if you have a debt on a credit card. Credit cards are an extremely useful way to give you that extra little bit of leeway when you most need it, and also offer some fantastic benefits such as additional consumer protection on your purchases. It all means that a credit card can be a great option when it comes to the festive season, and a relatively straightforward way to pay for things that you don’t quite have the funds for at the moment.

But paying your credit card bills off in a prompt and timely way is incredibly important. Why? Well, because while they are a convenient way to borrow, most cards will also charge you a considerable amount in penalty charges or interest if you don’t settle your debt on time. The key here then is to certainly use credit cards for the security and consumer benefits they bring – but then to always make sure you pay them off early (even if it is only a small chunk of what you owe). It is worth noting that most credit cards will have a minimum required payment, so make sure you know how much that is and pay this at the very least to avoid any penalty fees.

Don’t pay what you don’t need to

While we are on the subject of fees, it is one of the most important areas to address when you are looking at having a healthier relationship with your debts. For example, an overdraft facility is very useful line of credit to have if you are experiencing a few cash flow issues – but it is absolutely essential to make sure that it is agreed with your bank before you access it. Using an emergency overdraft facility or slipping into an overdraft can really start to cost you, and will ultimately only add to your debt problem. Those little 50p fees you are being charged every day for that overdraft facility will add up to hundreds of pounds over a year.

It is also important to be aware of interest rates, and to make sure that you are prioritising those debts that are charging you the highest amounts of interest. Essentially, these are the debts – like unpaid credit card bills – that are growing most rapidly, and need to be stopped early. Interest rates, like fees, are an extra cost on top of the original debt that you need to make sure you eliminate as quickly as possible.

So, review all your loans and your outstanding bills, work out which ones are being charged at the highest rates, and pay as much of them off as you can. Once again, it is always worth talking to your lenders and trying to negotiate with them – even if you can agree to just pay off a small amount of what you owe, it will help to reduce the rate at which the outstanding debt is growing.

Clearly, this final point about communication is also one of the most important aspects of having a healthier relationship with your debts. No debt has ever got smaller by ignoring it, and so it always pays to face the problem early, even if that means having some difficult conversations. Ultimately, it will always be worth it.