My Debt Experience

Where do I start, we are a normal family both working day to day with 3 kids we live in a council property.

I thought we were managing our finances well, until one day it hit us we have been living beyond our means for a few years now purchasing things on credit and credit cards bills just escalating around us.

We could no longer afford the repayments on the Debts and all the other household bills we were beginning to struggle, any how we struggled on for a few more months covering the short fall with credit cards to carry on day to day living. Then the red bills started arriving, late payment charges being added to accounts it all started getting us down. The pressure as I’m sure you understand if you are reading this is over whelming.

We had know idea where to turn to, who could help, because of the defaults we could not even get a loan to consolidate the Debts into one payment. The money arguments started between us as we fell further into the Debt trap ( robbing Peter to pay Paul as the saying goes ).

Finally we could not cope any more, I started looking around the Internet for help many companies offering advice and even that was confusing, eventually I came across the CCCS offering Free Debt Advice.

I phoned their helpline and talked to a lady, she calmed me down and told me that many people were in our position. She took my contact details and arranged a time to phone me back, she asked me to get the details of all my bills and household income and outgoing details to hand for when she called back.

When she called me back we discussed all the Debts and she worked out my financial position, I realised we could barely afford to live let alone pay all the Debts. She explained to me what my priority Debts were, Rent, Council tax, Utility bills, Tv Licence, Food etc. After a long discussion she advised me to write to all my creditors and explain that I could not afford the current repayments, but to carry on making token payments whilst the situation was sorted. She then sent me a pack in the post detailing my income and outgoings and also some sample letters to send to the creditors.

Once I put the phone down I was so relieved the help and advice was great, it has helped me to understand the household priorities and I now deal with my finances in a more positive manner, It has taken several years to get out of the Debt cycle but when you finally do the feeling is great to be living within your means.

Further details in this book give some advice based on my own experience on how to deal with Debt problems.

About Debt:

We all worry about Debt. Even the best of us can find ourselves in the middle of

unmanageable Debt at some point in our lives. This could be a result of unexpected job loss, a broken relationship, overuse of credit cards or unforeseen expenses beyond our control.

Things can and do go wrong and often these situations are unpredictable. Even the best financial plans can come unstuck.

When faced with too much Debt and not enough cash we can struggle as we try to determine who must be paid, who can wait and which creditors are happy to receive reduced payments.

This can make us feel very isolated and under a lot of pressure often we do not know what options are available or where to go for help.

What should you do:

Before you do anything you should work out your financial budget. This is an easy process.

Write down how much you earn and look at how you spend your money. For the next week why not write down every time you spend money and note what you spend it on. This will show you where your money goes.

Example: If you was to buy a newspaper each day you go to work at 45p over the year you would spend approximately £117

Work out the cost of items you buy each day as a yearly amount it may help change your habits.

Next write down a list of creditors, be honest and list all the Debts you have even if you are making regular payments, not only will this show you how much Debt you really have ( this figure may shock you ) it will help to work out how much you can afford to pay off the Debts.

Once you have your list of creditors create a monthly financial planbudget, again be honest with the amounts for each item on the list that you truly spend.

After you work out your financial planbudget identify those items where you can cut down your spending.

The money you save from this could be used to manage your Debt payments.

This is as simple as learning how to budget, developing a budget and sticking to it.

You may realise you spend more than you earn!

In any situation when you are having difficulties paying your Debts always talk with your creditors first. Tell them you are having difficulties and ask if they can help. If you feel under too much pressure to talk to creditors then write to them explaining your financial position and ask for help. Some creditors have processes in place which can give you temporary help, keep a record of all contact with the creditors and their responses.

Free example letters can be downloaded from www.nationaldebtline.co.uk this is also good site for further Debt help and advice.

If this exercise does not solve your debt management problem then you should consider other options.

It looks like you might need help:

Sometimes your Debt problems may be too severe to resolve by budgeting and/or speaking with your creditors. If this is you then perhaps you need to look at other available options.

There are many adverts around offering Debt advice, but ensure the support is FREE you don’t want to pass your Debt to another agency and end up owing them more.

The 2 companies below were very helpful and friendly they will understand and give good advice, they may also help with contacting your creditors.

Free Debt Advice:

www.nationaldebtline.co.uk – Freephone Helpline 0808 808 4000

www.cccs.co.uk – Freephone Helpline 0800 138 1111

Resolving your Debt:

However you choose to resolve your debt problems you need to be carefully informed. So make sure:

• You fully understand what you are doing
• Your payments will be reduced and not increased
• There are no hidden costs
• You are better off as a result of the option you have chosen

Good finance guide:

Ideally your should be looking at the following as guide for living within your means

Allow 60% of your net income for living expenses. For example:

• Housing
• Transportation
• Food
• Utilities
• Allow 10% for entertainment. For example:
• Clothing
• Holidays
• Other personal enjoyment costs

Allow 10% percent for short-term savings, with the last 20% toward longterm savings or Debt repayment.

Longterm saving when you are in Debt is not a good idea because the interest you are paying on the Debts will be far in excess of the interest you will make on the savings, you will be better off in the future if you clear the Debts then start longterm saving.

I hope this book helps you to take the first steps to resolving your Debt problems, from someone that’s been there its well worth it.