Say goodbye to debt stress
With so many gloomy headlines in the media about the recession, it’s hard not to feel a bit under the weather about money these days.
If you’re in debt, you might feel worried that you won’t survive the storms. Anxiety can be crippling, and stop you from taking steps to climb out of debt. Whatever your situation, you don’t have to face it on your own. There are many organisations that offer free advice.
Katie Clarke is a qualified lawyer and spent four years giving hands-on advice in a debt advice centre. Her new book ‘The Sixty Minute Debt Buster’ was published in February. We asked Katie her advice on facing up to debt.
How big is the debt problem in the UK?
Debt affects people of all levels of income because people have a tendency to live beyond their means. With the credit crunch, more and more people are struggling, and many are relying on credit cards just to make ends meet. According to Credit experts Experian, 18% of us will be buying our Christmas presents on a credit card this year. We’ve developed a lifestyle habit of using credit rather than saving up until we can afford to spend.
Have you seen anyone who was deep in debt manage to get back in control?
When I worked at a debt advice centre, I saw so many people come in feeling completely overwhelmed with debt, stressed out and depressed. When we helped them to face up to their debt and sort out a budget and monthly repayments they could actually afford, you could see the pressure and worry just drop off them. They left knowing that the debt was under control. They were no longer consumed with worry, scared to get the post or answer the phone. The difference comes from facing up to the problem and taking steps to deal with it.
No matter how hopeless the situation seems, it’s never too late to find a way out. One man came to see me with tears in his eyes and an eviction date in his hand. We helped him to make an application to suspend the eviction, and I went to court with him. He hadn’t told his wife and kids, but he had packed a bag with clothes for them and hidden it at the back of the wardrobe. If the hearing had not gone in his favour, the mortgage company would have taken possession of the property and would have changed the locks that day. But it went well, and he was able to stay in his home. Often, people don’t seek advice until they receive court papers, or even a court order, but it’s so much better to deal with things before they reach a crisis.
What are the tell-tale signs that a person might be losing control of their finances?
If you don’t know what you spend your money on, or where that last £20 went, you’re not in control of your finances. Perhaps you’re unsure that the cash machine will even pay out, or you use your credit card to buy every day things like groceries. Another sign is being disorganised with paperwork, and waiting until red letters arrive before you pay your bills.
How can debt pressure affect relationships?
Many people who came to the debt advice centre for help were carrying the burden of debt by themselves - they hadn’t told their partner or family about the situation. It’s a lot of pressure for one person to carry, and often that person is trying to protect their partner by concealing the extent of the problem. Money can put a massive strain on relationships whether or not you’re in debt. Maybe one partner is a spender and the other a saver, or perhaps one is good with money and the other isn’t. All of this can create pressure. Talking about money together can be difficult, but it’s always worth it!
If someone is overwhelmed by their debt problem, what can they do to start putting it right?
- Talk to somebody - there’s no need to deal with it on your own. Whether it’s a friend, your partner or someone at a debt advice centre, they can give support and often a sense of perspective.
- Stop thinking it’s too late, and start taking action now.
- Sit down and work out a budget. If this sounds like something you can’t face doing on your own, ask someone to help you. Gather all your paperwork around you so you don’t overlook anything. Make a list of each part of your income, including overtime, etc. Next, list everything you spend your money on. This will give you a clear picture of your money situation.
- Try to find areas you can cut back on – perhaps a gym membership, or coffee on the way to work. It all adds up! You might have to make sacrifices, but focus on freeing up as much money as you can to pay towards your debt.
- If you do have money leftover, work out what you can afford to pay to your creditors – remember some are priority, so pay them first. (You can find out what these are in the article ‘Take Control’.)
- It’s also helpful to keep a spending diary for a while. Make a note of everything you spend – it helps to see in black and white where your money is going.
- Stop using credit cards. Cut up the cards so there’s no temptation, and just use cash. People tend to spend more if they use plastic rather than cash, because credit cards whisper to us that this is not real money.
- Finally, don’t panic! You’re not alone, debt is a common problem, and there are often many solutions available, even if the situation seems hopeless.
Is there somewhere that people can go to find help locally?
Go to your local free debt advice centre (see useful contacts below), many of whom will write letters and make phone calls for you, and will explain the situation and act as a go-between so you don’t have to deal directly with your creditors. It will take the pressure off you, and give you confidence that you are taking back control. You can also call the National Debtline, who can advise you on your debts and will even help you work through a budget over the phone. Other helpful agencies include Christians Against Poverty, who help anyone with debt issues, and the Consumer Credit Counselling Service.
It’s so important to face up to your debt. Don’t bury your head in the sand. The problem won’t just go away and there are solutions available. You can take back control of your finances.
Sign up for the Looking at Life newsletter to receive a FREE copy of Katie's new book, ‘The Sixty Minute Debt Buster’,
Useful Contacts:
Citizens Advice: www.adviceguide.org.uk
National Debtline: 0808 808 4000
Christians Against Poverty: www.capuk.org
Consumer Credit Counselling Service: 0800 138 1111
Written by Katie Clarke.
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