It has been well noted in the media that our spending habits are at an all-time high and that, as a nation, we are taking on too much debt. This coincides with the recent realisation that shoppers who apply for store cards are being charged astronomical interest rates, some in excess of 30% p.a.! This has led to some experts believing that people will declare bankruptcy to avoid such debts, or turn to debt consolidation companies through poor advice, explains John Squire at Graham Paul.

So how can you avoid getting into debt in the first place and, more importantly, how can you work your way out of it? It may seem obvious, but one step you can take straight away is that of cutting up your credit or store cards; it’s best to take away the temptation now rather than let your bills mount up. However if you feel that you can manage a credit card, shop around with different lenders to see who is offering the lowest interest rates. Although always ensure that the bills are paid on time, as most lenders charge a fee for missed payments.

If you can, try to pay for items with cash, as this will give you a better sense of how much you are spending, says John. After all it’s much more difficult to part with your hard-earned money than it is to sign a piece of paper!

You can of course consolidate all of your debts with a loan, and many consolidation loan companies offer a tempting "quick-fix" solution, which can seem very appealing as it may appear as though someone else is taking away the burden of your debt. Beware, however, as interest rates charged on these loans are normally much higher than high street lenders, and they often come with payment protection insurance with unfair terms, that may not cover you if you are made redundant or fall ill. The majority of these loans are also "secured", which means that if you are unable to keep up repayments you will lose the roof over your head!

However, if you really feel that it’s too late and your debt is taking hold of you there are a few steps that you must take immediately. Firstly, stop spending. Secondly, don’t ignore your bills – they’re not going to go away, as long as you communicate properly with the finance company they will always be willing to help. Thirdly, ask for help – there are plenty of free organisations who are willing to listen to your problems and help you find a solution.