Problem Debt: First You Have to Admit There Is a Problem

Despite the existence of numerous debt charities and government schemes to help financially struggling people, many folks who are in over their heads in debt simply don’t realise they have a debt problem, or they haven’t faced up to how bad the problem really is. Accordingly they don’t seek help, and generally end up even deeper in the debt hole.

Earlier in 2016 the Money Advice Trust, the charity that runs the free National Debtline advice service, cited a change in the UK’s personal debt landscape that has contributed to this denial. Many people think of problem debt as being associated with loans, overdrafts or credit cards. They don’t consider falling behind on household bills such as utility bills and council tax as being a problem worthy of seeking advice from debt charities, possibly because they don’t see such liabilities as being part of a debt problem. Yet arrears in  these household expenses have increased significantly in the years since the financial crisis. While calls to the Trust concerning problems with credit cards, loans, and other traditional types of debt have decreased significantly over the last seven years, calls about problems with household expenses such as utilities and taxes have increased by 140 percent. And even though the government’s Money Advice Service has estimated that around nine million folks in the UK are over-indebted, only about 17 percent are seeking advice to deal with their debt.

But debt can become a problem whether you are in arrears on your council tax or your credit card bills. Very simply put, you’re not likely to get out of debt if you don’t face up to the issue. It’s somewhat like the first step in the twelve-step programs such as Alcoholics Anonymous: you have to first admit you have a problem before you can do anything about it.

Can you borrow your way out of debt?

Although it may seem counter-intuitive to take on more debt in order to solve problem debt, it is sometimes feasible. Debts to utilities companies and taxing agencies come under different regulations than do loans and credit cards, and the penalties, fees, and interest that such debts incur can be higher than what is charged on more conventional debts such as loans. In addition, falling behind on phone, electrical, or water service can rapidly result in suspension or termination of that critical service, with a significant cost to have the service reinstated or a new account opened.

While it is important to keep current on all your debts, a default on payments to one of these critical services can have immediate and severe repercussions that directly affect your quality of life. In such cases, incurring a loan with which to bring the expenses current can be a viable option, and even your best option. If you do find yourself in the position of having to incur additional debt to meet an existing debt, finding the least expensive loan that has terms you can meet is essential if you are to have any chance of climbing out of the debt hole in which you find yourself. If you are struggling to get out from under a relatively small one-time debt, a payday loan might suffice. If the amount is more than you can afford to repay in a single payment in the short term, an instalment loan that allows you to spread the payments over a longer period, up to 24 months, might be a better fit. And since different lenders offer different incentives, you will want to do your homework and compare what different lenders charge and the terms they offer before you start making applications for their loans.

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Advantages of Short Term Loans

There are many people who think that short term loans are a really bad thing. They feel that they are too expensive and risky and they would not like to use them and think that other people should not. However, we are all different and they can have advantage for many people. It can be worth knowing more about them to see whether they are something that would ever suit you.


Often a short term loan can be made available to people who have a poor credit rating. This means that they may not have any other way to borrow money. Although some say that this means that they are lending to the most vulnerable, it does provide a way for those who really need money and have no other way to get it. It could prevent people from becoming homeless by allowing them to pay rent, stop them having utilities cut off as they are able to pay their bill or provide them with much needed food.

The short term loans are also really quick to arrange which means that they can help anyone get a cash loan in an emergency. If they have a maxed out overdraft or credit card or do not have one, there may be no other option for them but to find the money elsewhere. If there is an emergency and money is needed really fast, perhaps to replace a broken white good, buy food or pay a bill, then this can be a really useful option.

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As the Seasons Change, It’s a Good Idea to Review Your Budget

Budgeting is something that often fills people with dread, but we’ve never been able to really pinpoint why. Of course, we do get letters from all of our readers. They talk about how they know they should budget, but they still never do it. They just go from month to month, blindly paying bills and following some sort of unspoken set of rules. It’s better to have a plan every month for where your money’s going. After all, it’s your money and it’s up to you to protect it as well as help it grow. Money can’t do anything without your decision making process being involved. In other words, if you want your money to grow then you’re going to have to look at your budget very carefully.

Since summer is giving way to fall, we thought it would be a great time to look at setting up a budget, as well as smarter money management tricks.


So, what should you do first? Well, it’s time to take a real inventory of how things are going. Have you noticed more use of credit cards instead of cash in your bank account? This might be a warning flag that your spending is out of control. It’s time to clip back spending by making better decisions. Do you need to make that sale, or are you just trying to do it in order to fit in with your friends? Trying to keep up with your mates is a big reason why you could be in serious financial trouble.

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How to get money in an Emergency

If you are desperate for money, it can be difficult to know where to go for help. Many people will just go to a place such as to get a short term loan and although these can be useful, there are many options available which could be worth considering as a short term loan may not always be the best option.

Although a short term loan is great as it does not require a credit check, can let you have money very quickly and if you make the repayment on time means you are out of debt very quickly, it does have drawbacks. It is expensive and if you do not pay it back on time there are high charges. It is therefore worth only using in an emergency, when you have no other options, which is what it was designed for.

If you have the time, then it could be worth trying to apply for other types of loans. Something like an overdraft or credit card could be cheaper. However, you do need to be very wary of these as the interest rate on an unauthorised overdraft can be higher than a payday loan and if you only pay back the minimum on a credit card then you will end up paying a lot of interest in the long term. Consider which you think will be the best option for you, knowing what you are likely to do with regards to repayments.

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6 Steps to take before bankruptcy

You may feel like you are in a financial hole so deep that you will never get out. Bankruptcy might look like the only way to solve your problems and get a fresh start. It’s not that easy, though. New laws that just came into effect have made it much harder for you to get a discharge of your personal debts through bankruptcy. That doesn’t mean that your situation is hopeless. The first thing you should do is work to get your debts under control. Here are three techniques which will help you do just that.

1. Find out what you are facing. Quite often the problem seems bigger than it really is. Gather together every debt that you have, write down what you owe and who you owe it to. Once you take a look at the problem on paper you might feel better about it. At the very least you will have a definite target to work towards instead of an uncertain enemy called debt. Once you have your debts listed, you can begin to make a plan. Look at the expenses that you can’t avoid – rent, car, etc. – and plan to pay them. Next, look at the interest rates of the other debts and determine the best order to tackle them. Once you have a plan and decide to stick to it you are on your way to a solution to your financial problems.


2. Cash or nothing. At the beginning of the month take a specific amount of money from your cheques in cash. This is your disposable income for the month. When it is gone you are done for the rest of the month. Essentially, you are giving yourself an allowance. It will be a shock at first, but after a while you will get used to this strict type of budgeting and you may even like it. It is empowering to use this method, because it allows you to set aside the money you need to deal with debt payment so you can pay off your debts more quickly.

3. Get your family involved. You may have got yourself to this point alone, but you don’t have to get out of it alone. Get your family involved. Be honest with them and let them know that you can solve the problem faster if you work together. If you turn saving into a game for kids, they will actually enjoy it. Have them look through the papers for coupons. Make it a game to see how much money your family can save in a month. Think of a fun but inexpensive prize you can give yourselves is you save more one month than you did the month before.

4. Say goodbye to ‘stuff’. Our houses are full of stuff that we are sure we needed at the time, but that lives in our closets now. We never use it and we don’t need it, but someone might. Use eBay or have a garage sale to get rid of the stuff that you can live without. You will feel better living in an uncluttered home and you will be surprised how much money you can raise doing this.

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3 Pitfalls to New Credit Card Offers You Should Know About

We love credit! It’s a powerful tool that can give us the things we really want in life. Try buying a house completely in cash. You might have great-grandchildren before you actually pull off this goal. If you’re going to buy a house, chances are good that you’re going to need a mortgage. A bad credit score pulls down your ability to get a great mortgage. You can still find lenders that will take a chance on you, but they have to make money. They’re more than happy to charge you an enormous amount of interest just to have you own your own home. And since they’re shelling out the cash, they get to make the rules. You might have a lower limit of purchasing than another person, which means it’s going to be three times as hard to find your dream home. What a drag.

But it doesn’t have to be that way if you’re willing to use credit wisely and rebuild your score. Even if you have excellent credit, be aware that it only takes a handful of mishaps and mistakes to send your credit score plunging down.

Here are 3 pitfalls to new credit card offers that you should be aware of.

1. Expiration Dates on Promotions

When the credit card says “0% APR for six months”, they really do mean it. So you need to make sure that you get your purchases paid off on time, every time. If you have any balance due when that promotion is up, guess what? They will charge interest on it.

Credit Card Offers

2. Order of Purchases

Cash advance? Purchase? Did you know that the credit card company categorizes these things ahead of time? If you are given a special promotion, you need to make sure that it actually goes for the type of purchase that you’re doing. If your promotion is for new purchases only, don’t expect to be able to use it with a balance transfer. And speaking of balance transfers…

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Check Out 3 Ways to Save More Money This Summer

Saving money and getting your finances in order is a good idea during the summer. For one, the children are home all the time, so you can include them on all of your decisions. It’s been shown that when children truly feel like you’re being mindful of their thoughts and emotions, they’re much more likely to respond favorably to you. They are also much more likely to be active in doing things that benefit the family as a whole. For example, if they’re prone to leaving the lights on in rooms where they aren’t even doing anything, they may turn off the lights more often. Same goes for water usage. They may try to make a game out of who can help the family save the most money. And let’s not even go into supermarket shopping, where it seems like they have an ongoing list of stuff they feel they have to have.

Below are three great ways to save even more money this summer than before.

1. Check Your Tariffs

You may be paying far more for electricity than you realize, just because you’re not following the yearly rates. See if switching to another provider will lower your utility bill any. If so, then you know what to do, don’t you? 🙂


2. Renegotiate Insurance Policies

Your family probably has a lot of policies they haven’t touched in a long time. Home insurance, car insurance, life assurance cover…the list goes on and on. If you haven’t checked whether or not you could save money on your premiums, then you’re basically losing savings that could help keep more money in your pocket.

To fix this, it’s best to call the company directly. Review your policy on the phone with them. If you don’t have a copy of the original contract you signed, get them to send you one first before you go into the negotiations. You want to be able to know your policy inside and out. What does it cover? What does it not cover?

Then when you have a firm grasp of your policy, ask for a better rate based on your solid payment history and low risk profile. Remember that in the world of insurance, risk is really the name of the game.

3. Make Sure ISAs are Topped Up

The new tax season is here, so you might as well get a jumpstart on your ISA. This is basically free money the Government is allowing you to keep. This year the limits have gone up to 15,000 GBP, giving you even more money that you can shelter. You may choose to keep it on the cash side or on the stocks & shares side. It’s completely up to you.

There are a lot of different ways to save money over the summer, but we thought these three tips would serve you especially well.

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