staycation Caroline Smith

Caroline Smith

The western world is in staggering debt (so is the government). In August 2023, the average household in England owes £2000 on credit cards and £60,000 in overall debt. This is no time to feel guilty or ashamed. Being in debt just helps banks (huge profits for shareholders) and lawyers. Also read reasons not to play the lottery.

If you’re in debt, it’s not going to go away. 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).

Pay off essential debts first (energy, water, council tax etc). It’s also good to pay debts to family/friends to avoid awkwardness. Most payday loans are now banned (don’t go near them). If you’ve got involved with loan sharks, contact a debt charity (below) for advice.

Bailiffs can only enter homes 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 camper vans (if a home).

why are we in so much debt?

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 £800 sofas (not free if you lose your job and can’t pay up). And lack of repairable items and skills. Learn how to mend and repair things!

The other reason is simply culture. People want designer-everything at the cost of ethics or getting into debt. 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! 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!

lifestyle changes to reduce your debt

  1. 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.
  2. Learn to cook (less grocery bills) and give up smoking/drinking. Go car-free or join a car-sharing club. Train for a couple of years to do what you love (to earn more money for less hours).
  3. 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). Or rent out a room (tax-free).
  4. Extended family homes (relatives sell tiny expensive flats etc, to buy a larger property with free baby/pet/granny-sitting on tap). And sometimes no mortgage (or far cheaper payments).

still in trouble? contact a debt charity

nature Jo Starkey

Jo Starkey

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:

  1. Debt management plan is when they take over your debts (often freezing interest) and you pay one monthly affordable payment until you’re back in the black (creditors deal with them, not you).
  2. Debt relief orders (sometimes debts are written off if you’re on a low income and have few assets).
  3. Debt respite (‘breathing space’) is when you have 60 days to stop paying, until you sort life out, if debt is caused by illness when you can’t work. People with mental health issues get extra time, with medical proof.
  4. Bankruptcy is when everything’s written off, if you have no hope of paying debts. It’s an option for you to start over. You won’t get credit (but won’t need it if you live simply). Creditors are told but unless someone searches your history, no-one knows.
  5. Equity release is when companies part-buy your home (to inherit) then give you money up-front. For people over 55, be careful as there are sharks around. Step Change has free impartial advice, if you’re going down this route.

other trustworthy debt charities

  1. 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).
  2. Debt Advice Foundation (this is the real one, be careful as others have similar names) is another national nonprofit.
  3. Christians Against Poverty (will help people of all faiths and none) can set up a plan to ave and pay off debt. Churches run their free budgeting courses (they also run free job clubs to help write CVs and brush up on interview skills).
  4. 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:

  1. Build a budget
  2. Save like a squirrel
  3. Dig out of debt
  4. Score high credit
  5. Learn to earn
  6. Invest like an insider
  7. Get good with insurance
  8. Increase your net worth
  9. Pick your money team
  10. 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

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