BILLS, debts and that sinking feeling of opening the wallet and finding nothing but fluff, old receipts and plastic cards on the verge of meltdown.
Now the excesses of the festive season have passed, it’s time to wallow in the dull ache of January debt misery.
Soon it’ll be blue Monday – the third Monday of the month this year falls on the 19th – commonly regarded as the most depressing day of the year, when all those bills from our December spending spree begin their painful journey through the nation’s letterboxes.
According to a recent report from StepChange Debt Charity, clients in Lothian are already struggling to keep their heads above water with thousands of pounds of debt hanging around their necks – an average of £12,017. Nationwide, consumer debt has hit a seven-year high according to recent Office for National Statistics figures. The average household debt has been put at £55,285 per UK household.
Sorting it out is not only a major headache – the nightmare of keeping the wolves from the door can impact on our mental health and wellbeing.
Professor Ewan Gillon, clinical director of First Psychology, says debt problems and depression are closely linked – a condition he’s dubbed “debt-pression”. And it’s a state which can feed on itself, making the problem increasingly even worse.
“When we are in debt we tend to feel depressed and in order to make ourselves feel better we may be more likely to spend which, in turn, leads to further financial difficulties,” he warns.
“We get into debt for a range of different reasons. Our personality type can have a significant impact on the way we spend. Some people believe money is a symbolic expression of power and success so that not spending money may evoke feelings of powerlessness and failure, which can be highly distressing. Financial pain becomes entangled with emotional pain.”
But what if debt is getting you down? Just how can you go about sorting out those money woes, once and for all?
YOU’RE NOT ALONE
StepChange Debt Charity handles more than 1000 requests for help from clients every month – so you’re not the only one with money troubles.
Debt can affect anyone, and admitting there’s a problem is the first step towards making it better.
According to its December Scotland in the Red report, the charity has seen a significant increase in the number of clients with arrears in some of the most basic household areas, such as rent, mortgage, gas, electricity and council tax.
Lothians had the biggest jump in average council tax arrears in Scotland, from £1443 in 2013 to £2255 by the end of June last year. Worryingly, many were fighting to pay for the most basic home comfort of all – heat and light. Contact utility companies, landlords, banks and credit card companies as soon as you realise you’re struggling.
CONFRONT YOUR DEBTS
Many adopt the ostrich approach to dealing with money problems, says Money Advice Scotland convener Joe Glancy.
But, he adds, shoving unopened bills into the kitchen drawer and hoping they just go away doesn’t work. “Better to see what you are dealing with and tackle it,” he advises.
Others try to be too ambitious and think they can meet repayments which, really, they can’t. “You might think that rather than repaying something at £10 a month, you’ll try to pay it at £50 and then find you can’t. Be realistic.”
StepChange Debt Charity recommends starting by assessing the scale of the problem. Gather your bills, payment demands and credit agreements, and make a list of what you owe, and who to. Make a budget listing income and outgoings over a typical month. Remember to budget for things that are paid less frequently like your car tax or TV licence. Money left over can be put towards paying your creditors.
MAKE DEBT A PRIORITY
StepChange suggests identifying debts that will have the most serious consequences if they aren’t paid – your mortgage or rent, secured loans, council tax and utilities, for example. These are the first debts you should aim to pay off.
Contact creditors to talk through your options. “It’s vital to stay in touch with your creditors, and be open and honest about your current situation,” the charity recommends. “They may be willing to negotiate a manageable repayment plan if they can see you are taking steps to pay what you owe.”
CHOOSE HELP CAREFULLY
Glossy adverts on television and radio may offer to sort out your troubles with a quick phone call. But according to Joe some can actually cost you money in the process. “Citizens Advice Scotland and local authority debt advice offices offer free and impartial advice – exactly the same as agencies which charge for their services.”
Edinburgh City Council’s Debt Advice Shop has bases around the city. Call 0131-200 2360 or e-mail firstname.lastname@example.org. To get free expert advice from StepChange, call the helpline on 0800 138 111 or use the online Debt Remedy tool at www.stepchange.org
AVOID THE MONEY SHUFFLE
Taking from Peter to pay Paul often only leads to more problems. “Avoid payday loan companies and loan sharks,” advises Joe. “Certain ‘quick loan’ places can have a place for some, but you must know what you’re signing up for and make an informed decision. Don’t embark on a pay day loan style agreement on a whim, the interest can be huge.
BE PREPARED FOR TOUGH DECISIONS
“Some have to accept that they are going to lose their home,” says Joe. “Older people may have to deal with the fact they will never be able to pay off their debts and they’ll pass to their next of kin.”
In some cases, the Scottish Government’s mortgage to rent scheme can help homeowners remain in their home by selling it back to a social landlord.
Others, however, will find they have to enter debt agreements which can span decades.
A debt arrangement scheme can allow you to repay your debts over a longer period of time while protecting you from creditors. And while it is a major step, bankruptcy is one way of wiping the slate clean.
Another option is to enter into a “trusted” arrangement, a formal agreement with your creditor to pay a portion of the debt within a period of time.