The truth about not paying your debts
Our ethos as a charity is to help the ‘can’t pays’ rather...
I’ve yet to meet someone who hasn’t made a mistake with money at some point in their life. Whether it’s forgetting to cancel a direct debit or paying more than necessary for something, these sneaky slip-ups can happen to the best of us.
At StepChange Debt Charity, we speak to thousands of people about debt every day through our Helpline, web chat, or online. Although no two stories are the same, there are some situations we see cropping up again and again.
Our Need to Sleep campaign highlighted that there are over 7.4m people in the UK struggling to sleep because they’re worried about money. We’ve put together a list of 10 common stressful money mistakes you might be making and how you can fix them…
We’ve blogged before about taking out joint loans or acting as a guarantor on someone else’s loan. This can lead to trouble if the other party can’t or won’t pay up. If you’re wondering whether or not to take out a joint loan or guarantee someone else’s loan, consider whether you’d be in a position to repay the full amount on your own. If the answer’s no then you should steer clear.
Maxed out a credit card? Lots of people don’t see a problem with this as long as they can afford the minimum repayments, but it can be a danger sign of debt.
Only making the minimum payments on an interest-bearing credit card can mean that the balance takes decades to clear. Worse still, if you’re making the minimum payments on one card you could be tempted to take out another card to spend on. To avoid the spiral of credit card debt, take a look at some of these alternatives to using cards.
Many people stand by the old saying ‘you get what you pay for’, but debt advice doesn’t have to come with a hefty price tag. In fact, we don’t believe anyone should have to pay for debt advice. Our advice is professional, tailored to your personal circumstances, and free!
We humans have an incredible capacity to bury our head in the sand. It’s pretty easy to convince ourselves that the overdraft facility that’s been at its limit for a couple of years isn’t debt. Or that missing a contractual mobile phone payment isn’t debt. Or that taking out just one payday loan isn’t debt.
Acknowledging your debts and understanding whether they are part of a bigger problem is the first step in dealing with them. For more information, take a look at our guide to the different types of debt out there.
If you’re in a relationship and have joint finances, often you’ll find one person will take the lead when it comes to deciding what gets spent and when. Being equally involved in the decisions made about your joint finances means you both share responsibility and accountability. That way, when you face an unexpected bill or change in situation, neither of you feel left in the dark or have to deal with it alone.
We don’t usually recommend consolidating debts as it can often make your debts bigger and your situation more stressful further down the line. For example, we’ve met clients who’ve consolidated their debts and then have had to take out further credit to pay for their living costs because the consolidation loan repayment is so high.
If you’re considering taking out a consolidation loan, this blogpost tells you everything you need to consider before deciding to consolidate your debts.
We all know how it goes. We subscribe to free trials which have an offer or freebie for a limited period of time. We input our bank details, get our goodies, and promptly forget to cancel the subscription. Before we know it, money’s draining out of our account for a service we didn’t even want or know we had.
To prevent yourself from being caught out by free trials, keep a note of what you’ve subscribed to and when the free trial expires. Scribble it on a calendar, use sticky notes on your computer, set up a reminder on your phone, or use MoneySavingExpert.com’s Tart Alert service.
Or short words, really. When it comes to debt, the list of acronyms is pretty incredible and the complicated terminology can be even more mind-boggling. It’s a code Sherlock Holmes would be hard-pressed to crack, but it’s always worth knowing what you’re signing up for. If you don’t know your EAR from your APR, this financial jargon buster from our blogger friend Skint Dad could be your new ally.
If you’re self-employed the first thing you should put away is your tax money. HMRC is a tough taskmaster and if you owe them money they’ll be strict in interpreting the rules.
At the same time, even those on PAYE (Pay As You Earn, which is how most employees pay tax) need to keep an eye on their tax code to make sure a mistake hasn’t been made. No one wants a bill landing on their doorstep at the end of the financial year, so speak to an expert or check your tax code to avoid making expensive errors.
“To fail to prepare is to prepare to fail” might sound a bit grim, but in our experience this couldn’t be more accurate. Saving for the unexpected should be a part of your budget. It’s difficult when money’s tight, but even putting a few pounds away each month can add up over the years and make things that bit easier when the washing machine breaks down or when the car fails its MOT.
For more hints and tips when it comes to managing your money, take a look at this guide from the Money Advice Service.
What common money mistake would you warn others against? Let us know in the comments!