Debt Management: Practical Tips for UK Finance Leaders

Got debt? Most of us do, whether it’s a mortgage, a student loan, or a credit‑card balance. The difference between feeling trapped and staying in control is how you manage that debt. Below you’ll find clear, actionable steps you can use today to keep your liabilities in check and free up cash for growth.

Why Debt Management Matters

Bad debt drags down cash flow, raises your risk profile and can even limit your ability to raise capital. In the UK, a one‑point dip in your credit score can add up to 2% extra on loan interest. That means a £10,000 loan could cost you an extra £200 a year—money that could be better spent on investment or hiring. Good debt management also signals to investors that you’re disciplined, which can lower your cost of capital.

Key Strategies to Control Debt

1. Prioritise high‑interest balances. Start with the debt that costs you the most each month—usually credit‑cards or payday loans. Even a 1% reduction in interest saves you a chunk of change over a year.

2. Use a realistic budget. Zero‑based budgeting works well: allocate every pound of income to a specific purpose, including debt repayments. When you see exactly where your money goes, you can redirect spare cash to the biggest balances.

3. Consolidate when it makes sense. A personal loan at a lower fixed rate can replace multiple higher‑rate obligations. Before you lock in a new loan, compare the total interest over the life of the loan with what you’re currently paying.

4. Keep an eye on your credit score. Pay all bills on time, keep credit utilisation below 30%, and avoid opening too many new accounts at once. A higher score gives you bargaining power for better terms.

5. Schedule regular reviews. Debt isn’t static. Set a quarterly reminder to revisit interest rates, repayment schedules and any new financing needs. Small tweaks—like refinancing a mortgage when rates drop—can shave thousands off your total cost.

Putting these steps into practice doesn’t require a finance degree. Start by listing every debt, the interest rate, and the minimum payment. Then, choose the strategy that fits your cash flow and stick to it. Over time you’ll see your balances shrink, your credit improve, and your confidence grow. Remember, managing debt is a marathon, not a sprint—steady progress wins the race.