Like all the best advice this is free and comes without warranty but I have worked the consumer finance world for most of my working life, and done my fair share of borrowing and repaying.

I keep hearing and reading a lot on the topic of people borrowing too much money and getting themselves into financial difficulty. Often the advice they are given is poor or wrong. First prevention is better than cure. If you have trouble managing to spend everything you earn then a credit card is a fantastic device. If like me you spend your time figuring out where all your dosh goes then a credit card is a nightmare. Get an online bank account and arrange an overdraft and use your switch card like you would a credit card. Using this method means all you have to do is check your balance and you get an instant picture of how poor or wealthy you are.

So what about a new car or other substantial purchase? The best type of loan I have found for this is a flexible personal loan like the one Cahoot offers at 5.8% APR. There is no penalty for paying the loan off early and you can vary the repayments if you find yourself having a bad month.

So what should you do if you have over borrowed and are struggling to meet the repayments?

• If you have secured debts like a mortgage which is secured against your house then unless you wish to have the property repossesed you must concentrate on paying these first, this also goes for secured car loans.
• Keep a dialog with the companies you've borrowed from, this is very important as they are legally obliged to try and make an arrangement to help you through a rough patch. It is very difficult for them to take legal proceedings against you if you keep responding to phone calls, letters.
• Don't talk to Debt Management companies they are parasites, they will reorganise your finances for a hefty fee promising you a lower monthly repayment but you will be making that repayment for a lot longer.
• Consider a consolidation loan but be very cautious about taking on a secured loan unless you are willing to lose the property you are securing the loan against. If you do go down this route look for a lower APR than your current debts.
• APR's are king the lower the better unsecured is better than secured. If you are quoted 'Flat Rates' ask what is the APR?
• Talk to your local Citizens Advice Bureau they will offer impartial advice.

If things get really bad you could consider bankruptcy, this is not an easy option there are varying punishments depending on how irresponsible you have been with your borrowing. It does offer a way of getting back to square one but you credit rating will be shot to pieces for at least two years.