England is in staggering debt (so is the government). In August 2023, the average household owes £2000 on credit cards and £60,000 in overall debt. How did we get in this mess? This is no time to feel guilty or ashamed. What’s important is to help absolutely everyone get out of debt. Being in debt just helps the big banks, lawyers and MPs (in their interest to keep people in debt, as it helps their friends at big banks to offer loans and mortgages, to keep earning huge profits for shareholders). Also read how farmers can get out of debt.
reasons not to play the lottery
Think the National Lottery will solve your debt problems? There is a suspicion among many than this lazy way for MPs to get the public to pay for things that should be in the Budget, creates super-jackpots for a reason. The average jackpot is £4 million. But for that money, you could have 80 winners each week winning £50,000 (the average or so debt). That would mean 80 people each week clearing their debts, then no need for credit cards, loans etc. Food for thought?
Forget the lottery, it’s a mug’s game, just save the money for a rainy day. Most people who jackpots are never happy (some have even been murdered for their money). And chances of winning are so low – you’re more likely to die from being struck by lightning on the way to buy the ticket – than you are of winning it!
Many people of faith say it’s a poverty tax (the dirt-poor spend their lecky bill on scratchcards due to desperation, and the money is used to fund a music hall). Quakers were offered hundreds of thousands of lottery funds to mend roofs. And refused, saying that ‘in order to win, someone poor has to lose’.
why are we in so much debt?
Several reasons. There’s economic growth policy, to ‘spend our way out of recessions’, rather than better alternatives. Credit cards mean you buy things with money you don’t have (even the man who invented them for emergencies, now says he wished he hadn’t). Then we have people duped into 0% interest credit to buy an £800 sofa (not free if you lose your job and then can’t pay up). And then the lack of repairable items (and skills). Learn how to mend and repair things!
The other reason is simply culture. People often want designer-everything at the cost of ethics or getting into debt. Let’s be Danish. In Denmark, there is no celebrity culture from the happiest country on earth. You can own a boat, but it’s frowned on to boast about it!
ensure you’re getting your benefits
The media like to paint poorer people as claiming benefits, while sitting on the sofa all day watching a huge satellite TV. Sometimes that happens. But nearly all unclaimed benefits are for people unaware – the vulnerable disabled, elderly and carers (often without Internet). Either them (or you) can visit Entitled To and take a simple questionnaire. Often you’ll find you have been missing out on £100 a week or more (and ask for 3-months backpay if available, it’s not offered autometically).
stare your debt in the face!
If you’re in debt, it’s not going to go away, so time to get honest. Get a cup of tea (or large glass of wine), sit at the table and write down how much you owe and to whom. Most companies prefer a token payment (it’s less hassle than taking you to court). Download sample letters (also for business) to offer a payment plan. If no joy, then contact a debt charity (below).
Lifestyle changes are a must. Not living beyond your means is more important than taking second jobs, which could make you knackered as well as in debt). Simplifying life is simpler! You could if viable downsize and move somewhere else (your expensive city flat could be swapped for a nice cottage by the sea in a cheaper area). One idea is extended family homes (popular amid Indian communities). Here’s an example:
You and your partner live in a tiny London flat, working 80 hours to pay the mortgage, and never see either widowed parent hundreds of miles away, nor the depressed granny with a dog who lives in her own house in a built-up area. If you all get on, you could all sell up and buy a nice big 5-bedroomed house with garden in a nice area, with no mortgage. Then you all regain time and money, live in a nicer area and granny gets a free dog-walker (and you have free sitters, if you decide to have children). Not for everyone, but could work for some.
Think outside the box. Convert unused space (for relatives to rent out). Rent a room (tax-free) or learn to cook (less grocery bills) and give up smoking and drinking. Sell your car and join a car-sharing club or go car-free. Train for a couple of years to do what you love, then earn more money for less hours.
Don’t waste time on energy-comparison sites (the cost for listing is passed to you). Like putting a sticking plaster on a volcano. Do the big stuff first, then tweak the details later.
still in trouble? contact a debt charity
Rather than consolidation companies, call (free) debt charity Stepchange after taking their questionnaire, so they know your story before you call (they’ve heard it all so if you’ve blown £100K on drugs, they won’t judge). Their experts will then come up with a remedy:
- Debt management plan is when they take over your debts (often freezing interest) and you pay them one monthly affordable payment until you’re back in the black (creditors deal with them, not you).
- Debt relief orders (this sometimes happens, when debts are written off if you’re on a low income and have few assets).
- Debt respite (also called ‘breathing space’) is when you have 60 days to stop paying, until you sort your life out, if debt is caused by say illness when you can’t work. People with mental health issues can get extra time, with medical proof.
- Bankruptcy is when everything’s written off, if you have no hope of paying back debts. It’s an option that can be good as you’re free to start over. You won’t get credit (but won’t need it if you live simply). Your bankruptcy won’t be announced (creditors are told but unless someone searches your history, no-one knows).
- Equity release is when companies part-buy your home (to inherit) then give you the money up-front. For people over 55, be careful as there are a lot of sharks around. Step Change has free impartial advice to trust, if you’re going down this route.
Pay off essential debts first (energy, water, council tax etc). It’s also good to pay off debts to family and friends to avoid awkwardness. Most payday loans are now banned (don’t go near them) and pay off loan sharks if you can (if not, contact a debt charity for help and advice).
Bailiffs can only enter your home with permission and take goods to sell (TV, furniture, jewellery, cars). They can’t take pets (illegal) nor things you need (washing machines, beds, cookers, vehicles with disabled badges and homes (camper vans).
- National Debtline runs a great website and phoneline. It has a fact sheet library to help with each type of debt (self-employed people can visit Business Debtline).
- Debt Advice Foundation (this is the real one, be careful as others have similar names) is another national nonprofit.
- Christians Against Poverty (will help people of all faiths and none) can set up a plan to help you save and pay off debt. Churches can apply to run their free budgeting courses (they also run free weekly job clubs to help you write CVs and brush up on interview skills).
- Payplan is the nonprofit arm of a for-profit company and specialises in help for mortgage problems and negative equity.
books to help you get out of debt
Get Good with Money is an American book with terrific reviews, which using a simple 10-step process by a former kindergarten teacher who lost her healthy nest egg when a recession (and encounter with a shady advisor) put her into a huge financial hole. She used her teaching skills to pay it all off, buy her own house and even mandated into law financial education for schools in New Jersey, where she lives. An uplifting alternative to money management systems, the 10 steps are:
- Build a budget
- Save like a squirrel
- Dig out of debt
- Score high credit
- Learn to earn
- Invest like an insider
- Get good with insurance
- Increase your net worth
- Pick your money team
- Leave a legacy
How to Get Out Of Debt is a wonderful 3-step process to get out of debt by a Canadian woman who cleared massive debt after becoming ‘tired of listening to middle-aged men in suits telling her to consolidate her debt – she got into more debt, and they got rich). Most people who read her book are debt-free within 2 years. A judgement-free zone from cover-to-cover, download free budget plans and spreadsheets at Erin’s website.
How to Attack Debt is a book by a Catholic family, but could be used for anyone. It looks at what money is (not to buy stuff or invest) and shows how the authors paid off almost $25,000 of debt in less than 8 months.
Stay away from debt at all costs. Debt (not poverty) is the greatest energy of financial well-being and peace of mind. Debt causes us to mortgage our future for the present. They will dress debt up in a suit, and call it credit. But it all comes down to the same thing. You will have mortgaged your future, to pay for your present. And that is something you never want to do. Kent Nerburn