Simple steps to getting out of debt as a charity warns six million families are struggling with bills

MORE than six million families are currently struggling with bills or face the risk of falling into debt in a month.

Shocking new research has revealed that 5.5 million households across Britain owe more in debt than they have saved.

And many families face the prospect of landing themselves in debt in just a month should they lose their jobs or suffer a financial shock.

Over a quarter of non-retired households have too little saved to pay the £540 typically needed for a boiler to be replaced.

The Equality Trust found 42 per cent of non-retired households have less put aside than would be needed to cover the average month's worth of household bills at £2,125.20.

They have urged the government to scrap plans for a Lifetime Isa next year and instead use the funding to boost the Help to Save scheme, which aims to encourage low-paid workers to build up a rainy day fund.

Help to Save accounts will be available no later than April 2018 under the Government's plans. They will be will open to millions of employees who receive in-work benefits.

Lifetime Isa accounts will be available from April 2017 and will boost the savings of people, aged between 18 and 40, who are saving for their first home or their retirement.

Executive Director of the Equality Trust, Dr Wanda Wyporska, said: "The Government must change direction and offer greater support for its Help to Save scheme, rather than projects such as the Lifetime Isa."

But there are ways to ease your debt and stop you spiralling further into the red.

Work it out

Start by simply sitting down and working out exactly how much you owe.

If your debt repayments excluding your mortgage take more than 20 per cent of your net monthly income you are entering a danger zone and must take steps to cut back.

Budget

Taking the time to come up with an accurate budget to help keep track of your spending makes it easier to come up with a schedule for repaying your debts.

Be disciplined and watch your daily spending

Don't borrow more money or take on any debts until you have repaid what you already know.

If you take a set amount out of the bank at the start of the week and give your card to friend or family member for safe-keeping it will be easier to keep track of how much you spend and you won't be able to draw out more.

Organise your bills

Make sure you are paying all your utility bills by direct debit. It's much easier to manage as you won't have to worry about sending cheques on time and it is also cheaper as most providers offer discounts for direct debit payments.

Switch power supplier and bank accounts

Shopping around for cheaper gas, electricity and water can save you hundreds of pounds.

If you're a customer of one of main high street banks - then you're probably not getting the best deal on your overdraft or interest rates.

The rise in the number of internet banks means there is far more choice, so it makes sense to switch and take advantage of offers such as fee-free banking and lower overdraft rates.

Switch to a cheaper credit card/loan

Try different providers and you'll probably be able to find a credit card or loan with a better rate than you're paying now.

But remember that these special offer rates will rise after an initial interest-free period so make a note in your diary to change deals again.

It's best to go for a low rate that looks stable rather than 0% for a limited period.

Cut up store cards

Store cards charge the highest rates for credit so throw them away to avoid temptation.

Switch your mortgage

This is probably your biggest expense each month so it is important to insure you have the best deal.