Women and debt

The number of women in debt - and failing to find a way out of it - is on the increase according to new figures. Research by debt solutions consultancy, Thomas Charles, found that the number of adults in the UK with more than £10k of unsecured debt has soared by almost quarter of a million in the past six months, rising 1% from 8 million in April 2006 to 8.4 million in October 2006. This means one in five people now have unsecured debts of over £10k. And this week's recent rise in the Bank of England base rate from 4.75% to 5% can only compound the problem.

Women are worst

Women with more than £10k of debt were found to be the group experiencing the most financial difficulty, with one-third reporting regular problems in repaying their debts. Also more women were considering declaring themselves insolvent or bankrupt than men. Other figures from a study by ICM found that women in their 30s were responsible for an epidemic of 'binge debt'. An analysis of debt levels showed that many women over 35 accumulated debts of £8,219 compared with the £3,436 owed by men of the same age - a difference of a staggering 139%. So what can women do to dig themselves out of debt?

Stop spending!

First, make a budget detailing what you have got coming in each month aganist your expenses such as mortgage repayments or rent, household bills, council tax and travel costs. Then make a list of what you normally spend on luxuries such as going out, shoes, clothes, gym fees and grooming. It is the second list you need to examine closely because this is the one you can make cutbacks on.

Make a pledge not to buy any new clothes for three months and you could be amazed at what you will save. If you find that much of your outgoings are spent on wild nights out then think about spending more time at home. The cost of cocktails and taxis can really add up and a night in with the girls, a cheap bottle of wine and a DVD can be just as much fun. If youre a therapy addict, consider cutting out facials and massages for a month or two and if youre a member of a gym but rarely use it, cancel your direct debit.

How much do you owe?

If you carry out these cutbacks effectively, you should have more money to start repaying some of your debts. The next job therefore is to make a list of what you owe and to who. Including everything such as credit cards, loans, store cards, overdrafts - and even student loans. Prioritise your debts in terms of interest rate levels. Put those that have the highest interest rate at the top of the list and student loans which are effectively interest-free - at the bottom. Then use the money you have saved on luxuries each month to pay off your debts, paying those charging the highest interest rate first.