If there is one thing that causes many sleepless nights, it is money, or rather the lack of it. There is no worse feeling than not knowing how you are going to pay your next bill. We all like to think that we will never find ourselves in this position, but sometimes life deals us a nasty blow. You could lose your job, for example, and not everyone has the bank of mum and dad to fall back on. Knowing what to do if you or someone else is in financial trouble is key. Read on to discover some information that should be able to assist you.
A ‘crisis’ or a real crisis?
Before you can find a solution to the money troubles you are experiencing, you first need to determine what type of problem you are facing. If you are struggling to live the kind of life you want to, i.e. you can’t go out with your friends whenever you fancy or you can’t buy all of the new clothes you want, this isn’t a real kind of crisis. You can look at other aspects of your spending in an attempt to cut back, but it’s not world ending stuff!
So, what counts as a real crisis? Are your debts bigger than your income? If you have more bills to pay than the amount of money you have coming in, you’ve got a big problem on your hands. And, by bills, we mean loans, credit card bills, utility expenses, and such like. You also have a problem on your hands if you are struggling to pay basic outgoings, including your energy bills, credit card minimums, rent or mortgage.
Size isn’t everything
No doubt you have heard this saying before! You may be surprised, but it actually applies to debts. It’s not always the bigger the debt, the bigger the problem. It is about affordability. You may owe more money than someone else, but if you’ve got longer to pay it back and it’s split into smaller portions, you may be able to manage it. You also may earn more than the other person, making a bigger debt more affordable to you.
Sort out your spending
If you find yourself with a debt crisis on your hands, there are a few things you can do. It’s important to recognise that debt is not the problem, your spending habits and money management is the problem. Debt is simply a symptom.
The first thing you need to do is reduce the amount you spend. Of course, this sounds obvious, but it is really important. Not only is it vital because it means you will not be borrowing more, but it also means you can maximise repayments. So, begin by doing yourself a budget.
Also, see if you are entitled to any government benefits, or if you can reclaim anything you have already paid out. A lot of people have been mis-sold payment protection insurance (PPI), and this could give you $1,000s back. You may also be paying too much for your tax, so that is worth looking into further.
Know when to lend and when not to
Sometimes lending more money can be beneficial when you are in debt. This is for the purpose of debt consolidation and to capitalise on better interest rates, i.e. lowering your debt. For more information, read this! No matter your situation, rushing into another financial agreement is never wise. You need to really take the time to understand everything.
There are various government schemes in place to assist those who are struggling with money problems. There is one that has been designed specifically to assist those who cannot make the monthly repayments on their mortgage. Under this scheme, the government will pay the interest on your mortgage up to a certain amount.
There are local council support schemes in place too. So, talk to your local authority, as they may be able to assist by giving you cash, food grants, furniture, or anything else that helps. This differs from council to council so there is no guarantee you’ll get cash, it may be another form of help.
There is also a government scheme that gives people loans that are interest-free if they require essential items that they cannot afford to pay in one go, for example, furniture and clothing. These loans are for people on certain income-based benefits.
Where else to turn
If you are not entitled to government help, it’s not the end of the road. There are many debt counselling centres. But, you do need to choose with care. Make sure you choose a non-profit organization. If you opt for any other type of debt assistance, you’re going to have to pay for the help, which just adds to your problems.
Agencies you can reach:
- Debt Advice Foundation
- StepChange Debt Charity
- Citizens Advice
- Christians Against Poverty
- The Debt Counsellors
If you are being harassed by debt collection agencies, a non-profit organization will be able to help. There is an agreement between the Credit Services Association and the Government that states debt collectors cannot contact you for at least 30 days if you have proven that you’ve got help with your problems.
Hopefully, you now feel more prepared for dealing with money worries, no matter whether they are your own or someone else’s.