Untitled Document

Debt as a Social Policy Issue

Top Ten Tips on avoiding debt
1	Be clear about where your money is going. Take a long hard look at your finances,work out all your income and your spending and look whether there is any room to cut back or make savings.
2	Be realistic about what you can afford. Work out how much you can spend and stickto it.
3	Use standing orders and direct debits to meet regular outgoings such as rent/mortgage, utility bills, council tax etc. Arrange for payments to go from your bank account just a few days after your wages have been paid in.
4	Try to save something every month, especially for planned spending like holidays and Christmas. Set up a standing order to a savings account. You will be surprised how quickly you will forget you are saving!
5	Aim to have three to nine months of your expenditure tucked away for unplanned events like pregnancy or redundancy as well as planned savings.
6	If you can pay for goods outright, don’t be persuaded to take out credit unless it really does work out cheaper or better meets your budgeting plans.
7	Always try and pay at least 10% of your balance every month on your credit cards.
8	If you are taking out new credit – whether buying a house, a new car or getting a loan – think carefully about how you would manage the repayments if interest rates start to rise, or if you suddenly find yourself out of a job. This is especially important in the case of mortgages and secured loans where your home is at risk.
9	What seems like a good idea can have hidden costs. Reduced monthly minimum payments result in larger total payments. Interest free credit has to be paid off in full before the free interest period expires.
10	Spend time shopping around before borrowing. Research what’s on offer and get advice. Never borrow money on the spur of the moment. You will be paying the price for years to come if you don’t think it through.

Top Ten Tips on how to deal with debt
1	Don’t panic! And don’t ignore the problem, it won’t go away.
2	Don’t take out more credit or put more on existing credit, like your credit cards – you’ll only get yourself into worse trouble.
3	Talk to your creditors and let them know you are having problems.
4	Don’t pay off the person who is shouting the loudest, but pay the most important ones like mortgage or rent; council tax; gas and electricity. Otherwise you will be in danger of losing your home, having your gas and electricity cut off or ending up in court and possibly prison.
5	Don’t ignore court papers.
6	Check your income and see if there is anything you are entitled to that you are not getting. For example, new tax credits can be quite generous.
7	Look carefully at your spending and see if there is anything you are able to cut down on but don’t be over ambitious or you will not stick to it.
8	Work out how much you can realistically afford to pay.
9	Think twice about taking out a loan to pay off all your debts. You may end up paying back a lot more than you borrowed and at very high interest rates; you may not be able to afford the repayments; and the loan may be secured against your home which you could then lose.
10	Don’t pay for advice. The CAB gives free, independent and confidential advice. We will help you work out repayments and negotiate with your creditors, and also help you keep out of debt in the future.