More than 12 million people will be running up debts on their credit cards to fund day-to-day living costs to see them through January. High levels of inflation, particularly for essentials such as car fuel, food, gas and electricity, combined with real-terms salary cuts, mean that many households have started 2012 with a shortfall, according to the fifth annual Post Office Consumer Credit report.

More than four out of every 10 people will rely on their credit card to buy groceries this month, 10% will meet outstanding Christmas costs and debts with plastic, while 7% will use a card to pay domestic bills.

The pain will continue next month, says product comparison website Moneysupermarket.com, because homeowners use about 40% of their energy consumption from mid-November to mid-February, so those on standard energy tariffs could face average quarterly bills of £514 in February.

The findings follow even more alarming research by the housing charity Shelter, which indicates that almost 1 million people have turned to a high- cost payday loan to cover their mortgage or rent in the past year. The charity, which questioned 4,000 people, said it believed a further 6 million have used other types of credit, including unauthorised overdrafts, other loans or credit cards, to help pay housing costs.

Inflation is expected to drop dramatically in February when last year's rise in VAT to 20% has been in place a full year but this will not reduce the burden on household finances – it simply means prices are not rising as quickly.

For those who already have debts – or who know they will build them over the next few months – it is imperative to borrow as cheaply as possible, and make sure other finances are working efficiently. Follow our five-step plan to getting your finances back into shape.

■ STEP ONE Add up all your borrowings

You need to know exactly how much you owe, how much interest you are paying, and to whom, particularly if you have a "white labelled" card marketed by one company, but operated by another.

If you already have a credit card or loan with a company it is unlikely to allow you to take out a further loan or credit card to consolidate your debts and you could end up with a rejection "footprint" on your credit record that will deter other lenders.

Once you have added up all the debt, work out how much you can reasonably afford to pay off each month.

■ STEP TWO Transfer to a zero interest deal

If your debts are restricted to one or two credit cards which are incurring interest, the cheapest option is probably to transfer the balances to a zero interest credit card deal. Barclaycard is offering one for 24 months, with a 3.2% balance transfer fee, or for 21 months with a 2.6% transfer fee. In both cases, the rate reverts to a typical 17.9% APR after the interest-free period. If you already have a Barclaycard, consider similar deals from Virgin and Halifax.

■ STEP THREE Consolidate

If your debts are too big to move to one credit card account you have two options. The first is to move as much as possible to a zero interest credit card deal, pay the minimum allowed on this account and concentrate on paying the more expensive debt that you were unable to transfer. Alternatively, you could apply for a personal loan to cover the whole lot. This will inevitably be more expensive – Zopa is the cheapest lender for £5,000 loans over three years, charging 7.7% or £155.42 a month. But the big advantage of this is that repayments are fixed – you know that at the end of the three years your debt will be dealt with.

■ STEP FOUR Check your other finances are up to scratch

Overdraft: Is your current account permanently in overdraft? If so, make sure you are not paying over the odds. Santander charges nothing for overdrafts in the first 12 months, and 50p per day thereafter, capped at 10 days per month. New customers also get £100 cashback on switching, while existing customers get up to £300. The bank says applicants may be able to transfer existing overdrafts to their new current account, but will have to go through an affordability assessment first.

Utilities: Gas prices are up by an average of 17.4% and electricity by 10.8% following recent rises, and if you are on a standard tariff or a fixed deal that is about to end, an average household could save up to £360 a year by switching to the current market leading deal, First Utility's iSave v9. Visit guardianenergycomparison.co.uk/ to see how much you could save.

Mortgage: For many people this is the biggest outlay every month, so it's vital to discuss your options with a mortgage adviser. If you have had the same home loan for a long time you may be able to reduce the interest rate by remortgaging. If you want to raise money to pay off other more expensive debts, but you are on a good deal that you don't want to lose you could ask your lender if you could switch to interest-only for a while, or extend the amount you have borrowed with a top-up loan.

Credit cards: If you need to use credit without paying it off in full at the end of the month, make sure you opt for a card with a long zero interest deal for purchases, and a loyalty scheme that will provide additional benefits. The Marks & Spencer credit card and Tesco Clubcard allow interest-free purchases for 15 months. The M&S card awards one point for every £1 spent in its stores, and one point for every £2 elsewhere, with 100 points entitling you to a voucher for £1. The Tesco card earns one point for every £1 spent in a Tesco store, and one point per £4 spent on non-Tesco shopping.

Insurance: Whether it is your car, your home or your life you want to insure, make sure you shop around for the best deal. Visit money-deals.co.uk and go to compare-and-buy-insurance.

■ STEP FIVE If you are desperate ...

Seek advice from a free debt counselling service, such as Citizens Advice, National Debtline or the Consumer Credit Counselling Service. Advisers as these services can help you work out what to do about your debts, establish a budget that you can stick to and negotiate on your behalf with your creditors to reduce your monthly outlay.

Do not, under any circumstances, borrow from a doorstep or payday lender to get yourself out of trouble in the short term. These loans may be quick and easy to arrange, but they are hideously expensive, with interest rates ranging from 300% to 4,215%. Likewise, try to avoid going into an unauthorised overdraft: these rack up charges that can make payday loans seem cheap.

You may qualify to join a credit union that lends money – either because you live in a certain area or belong to a work, religious or social community. Credit unions charge from 12.7% APR to a maximum of 26.8% APR, and a £300 loan can save a borrower £200 on the cost of a typical doorstep loan.

Or, if you live in the Midlands, you could try My Home Finance, a scheme launched in 2010 to lend to people who are otherwise financially excluded.