Keeping honest ‘helps clear debt’

Those keen to get debt free need to be a bit more honest about their debts, a financial psychologist has said.

Creator of financial attitude website Taming the Pound Kim Stephenson argued people need to tell themselves the truth when it comes to money and also reassess their attitude towards it.

He stated: “Sorting out debt and bills is very tricky if one or more of you are lying about what the debts are. If you don’t know where you are and what the debts and bills are, it is difficult to deal with them.”

Mr Stephenson noted the common assumption is people should set themselves a figure they need to live off and try to manage it, but he suggested an attitude of mind needs to be adopted to assess priorities.

Each consumer should ask “what will really make you happy?” he noted, stating that many will spend a lot simply to impress others like friends or family.

Those keen to get debt free may wish to consider this approach and could consider the elimination of credit card debt or the end of repossession worries to be a source of greater happiness in itself, as it would remove a major source of stress.

Some may have taken such a view at the start of 2011 and resolved to reduce their debts, as Bank of England figures have revealed the level of consumer credit dipped by £0.3 billion in the month.

However, there was a contrast between credit card debt levels (up £0.1 billion) and other forms of credit including loans (down £0.4 billion).

By Amy White