Putting the Credit Genie Back in the Bottle

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The 2008 financial crisis was a disaster of epic proportions from which the global economy has still not fully recovered: growth is anaemic, wages have stagnated and good paying jobs are more scarce than ever before. But even with all those things as givens the fact is that the 2008 financial crisis did produce at least one positive result: people stopped borrowing and began paying down their debt.

This welcome trend continued more or less unabated until 2014 when personal unsecured debt levels began to rise once again. Today it seems any lessons learned from 2008 have been forgotten as consumers have bellied back up to the credit trough to gorge themselves on funny money. Personal debt in the UK has now risen to more than £1.5 trillion and the upward trend shows no signs of abating.
What’s it all About?

When one sifts through the recent statistics on personal debt in the UK perhaps the most troubling fact to emerge is that UK consumers now carry a staggering £67 billion in credit card debt. That’s more than the total GDP of Bulgaria or Panama. So why is it that so many who seemed humbled by the events of 2008 have now decided to once again embrace borrowing as a way of life? There’s no easy answer to that question but there are a couple of likely suspects we can point to.

● Record low interest rates – With interest rates at historic lows many people have simply found themselves unable to resist temptation. Most who venture into the land of 0% interest are convinced they’ll be able to muster the discipline to steer a responsible course but the fact is many lose control and wind up with balances that will take them years to pay down.

● The non-recovery, recovery – While huge financial institutions and the 1% have recovered in spectacular fashion from the Great Recession the picture for the rest has been decidedly less rosy. As mentioned above wages have stagnated or even tumbled, overall growth has been anaemic making it difficult for new businesses to find their legs and good paying jobs have continued to evaporate. Many have simply tired of waiting for things to turn around and decided to follow government’s example and borrow their way to a better future.

Whatever the reasons behind the current credit bubble however the fact is that, having dug such a formidable hole for themselves, people with massive credit card debt now need to find a way out before they drown in a sea of red ink.
6 Steps to Retire your Credit Card Debt

When you’re facing a mountain of credit card debt things can seem very dark indeed. But the situation doesn’t have to get the better of you if you’re willing to following these steps:

1. Put the cards away – Or better yet, cut them up. The first rule of problem solving is to stop doing things that make the problem worse. In the case of credit card debt that means either putting the cards away where you don’t have easy access to them or simply cutting them up and being done with it. The latter is the preferable method as it will eliminate all possibilities that you’ll give in to temptation and go on a counterproductive spending spree.

2. Take stock of your situation – Once you’ve removed temptation by stashing your cards somewhere inaccessible or cutting them up it’s time to take stock of where you stand. Gather all your credit card bills together and add up exactly how much you owe. Take note of the interest you’re paying on the various cards and which ones have the most odious rates. These will be the ones you’ll want to tackle first.

3. Reduce your expenses – In order to make real progress in paying down your debt you’ll need to free up as much money as possible to put toward repayment. Cut back on non-essentials, try to find a cheaper energy supplier, consolidate all your digital contracts into one money-saving package and eliminate those double mochaccino lattes.

4. Pay as much as you can afford – If you just make minimum payments it could take you decades to clear your credit card debt. You need to resolve to pay as much as you can afford in order to make real headway. You should also make a concerted effort to pay off the highest interest rate cards first as interest is the real killer when it comes to credit card debt. Once you have those cleared you’ll feel a noticeable sense of relief.

5. Consider a debt consolidation loan – In some cases a debt consolidation loan may be the best way forward. You’ll quickly satisfy all your credit card debt and be left with only a single monthly payment that’s typically smaller than the combined payments you were making before. The danger with the debt consolidation loan is that once your credit card balance reads “0” you may be tempted to start using it again, in which case you’ll have undermined the entire reason for taking the debt consolidation loan in the first place.

6. Stay resolute – It’s not uncommon for people to tackle the worst of their debt problem and then lose focus. They believe the dark days are behind them and go back to their hard charging ways. In short order they find themselves back where they started wondering what went wrong and convinced they’ll never be free of debt problems. This won’t happen if you see the repayment plan through to its conclusion and then work with credit counselling agencies to modify your behaviour going forward.

Credit card debt can be a vexing problem that undermines nearly every aspect of your life. But it’s not a genie that can’t be returned to the bottle. To rectify the situation you’ll need personal resolve and a logical, realistic plan of action. If you find that credit card debt has gotten the better of you take the above steps to put yourself back on the road to financial solvency.

Debt is not a dirty secret

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Every week in the UK roughly 14,000 people receive a county court judgement (CCJ) because of money they owe. The average amount of UK household debt is around £13,000 – not including mortgages or student loans. But how often are these facts topic of conversation? How often do you see money worries discussed on social media – compared to the number of pictures of new purchases or holiday snaps?

It seems that for a huge number of people, debt is considered a ‘dirty secret’  – with many people opting to keep the extent of their financial worries from even their partner and closest loved ones. But many continue to ignore the problem and done seek debt help.

However, burying your head in the sand is not the best option and you must seek help to get your debt under control.

Why is this the case?

Psychologists explain that most people strive for an image that portrays them as more care free and happy than they often are, with an underlying worry that sharing ‘problems’ can lead to others considering them boring or depressing. This attitude can lead to debt problems feeling very isolating and lonely – not only do you have collection agency letters dropping through the door, but you also don’t feel you can tell anyone about it.

Recent studies suggest over 8 million people – that’s 1 in 6 UK adults, have ‘problem debt’ and almost all UK adults owe money in some capacity. Despite such large numbers of people struggling, the stereotypical image conjured up by the word ‘debt’ is often still one of a person who is irresponsible with money, disorganised or a compulsive spender.

This image is far from the truth, unforeseen life events contribute toward financial worries far more frequently than any irresponsible attitude. Is there any shame in being made redundant? Falling ill? Losing a loved one? Having mental health struggles or experiencing the breakdown of a relationship? The answer is a resounding ‘no’ – yet the debt problems that can go hand in hand with these difficulties often remain an unspoken taboo subject.

The problem with a ‘stiff upper lip’

Prince William recently spoke out about how damaging the typically British ‘stiff upper lip’ attitude can be to a person’s health – and rarely is this more apparent than in matters relating to money problems. While the phrase often paints the picture of someone who is ‘emotionally strong’ – this is very often a huge misconception, in fact, those who consider themselves ‘stiff upper lipped’ are shown to be far more likely to succumb to mental health issues, including depression, anxiety and post-traumatic stress disorder (PTSD).

The links between debt and ill-health are profound – and the tragic truth is that a deterioration of a person’s health can often lead to more and more money worries. The UK currently has more self-employed people and individuals working on zero-hour contracts than ever before. This means there is likely to be no sick-pay for someone whose money worries lead to being unable to work. For those who are employed on standard contracts, the impact can be equally huge – work performance is shown to be one of the first things impacted when a person’s mental health becomes strained.

If unaddressed the associated health issues and imagined ‘shame’ of being in debt can lead to the use of unhealthy coping strategies. Excessive drinking, drug misuse, unaffordable gambling and other risky behaviours might feel like they can offer some short-term relief, but any of these can turn a bad situation infinitely worse. The sad truth is that for many people these options look favourable when compared to discussing their issues.

So what is the answer?

The detrimental beliefs about debt that lead to it being kept a secret often start with the person finding themselves in difficulty. Being in debt does not mean you are a failure. Debt is not an indication that you should be earning more, trying harder, being more responsible or ‘grown up’. Debt can affect all, regardless of who you are, where you live or what you do. There is no model behaviour against which you are being judged.

Honesty in matters relating to debt is tremendously helpful – and often contagious. A money problem discussed with a friend will frequently end up with a two-way discussion about their similar situation – and even if they’re not experiencing the same, it’s incredibly reassuring when they don’t run a mile. Discussion with professionals helps too, the links between money worries and mental health have long been recognised by GPs – and they can access resources for you that can be very helpful. If you do feel like you’re ashamed about your money situation – for any reason at all, it’s likely that talking to a counsellor could be helpful too – your GP will be able to refer you and all counselling services operate with the strictest confidentiality, so can be a good place to help you talk through the issues safely.

Honesty is important

Ignoring debt can be extremely damaging in vast number of ways, so talking to the companies you owe money to is essential when it comes to preserving your well-being. Honesty in these scenarios is vitally important. A sense of pride might make you inclined to play down the magnitude of your debt and associated problems to the collection agencies or companies that are chasing you – but this rarely leads to a positive outcome. Trying to work beyond that pride means you’re likely to be more realistic with any arrangements you make – and virtually all companies will consider your health when trying to find a solution.

While the stereotypes and taboos around debt aren’t going to change overnight, conversations can. The companies you owe money to do not consider you irresponsible or reckless. The medical professionals you talk to expect money problems to occur and they expect those problems to impact on your mental and physical health. There are charities and organisations created solely to help you find your way back to being able to cope. The world is far more equipped to help you with money problems than you might expect.

Debt is not a dirty secret, it’s a problem that almost everyone will encounter at some point in their life and an issue in which you do have some power to begin steps toward fixing.

Where to Seek Debt Free Advice

Struggling with so much debt can lead to a serious case of stress and anxiety and if you are in this situation, it would be best to seek for financial assistance in terms of debt advice from experts. The importance of talking to a professional financial adviser is that he or she can give you a full understanding as to how you’re going to increase your savings through management of your budget and at the same time provides you with information as to how you’re going to overcome your financial debt situation.

How can a financial adviser help you?

Of course, they do not help you in terms of giving out money, that would be not the reality of having a financial adviser. However, their opinion matters most especially when it comes to identifying the source and factors that affect your livelihood which has led you to debt. Furthermore, here are some reasons how they can assist you.

They never judge– if you think asking turning to someone who might help you solve your problem is something for you to be shy about, well think again twice. Financial advisers are trained not to judge and to understand every client that they handle. If you feel like you are being judged, perhaps the factual situation has been laid out to the table for you to understand the reason why you are in great debt. It is encouraged for every person who is in debt to consult professional assistance.

They are always happy to have you talk to them your financial adventure– hearing stories of financial success are something that you should be proud of. You can be a good testimony for your financial adviser’s other clients so that they can feel hope with their situation as well.

Find ways to manage– the good thing about having a financial adviser is that they always find a solution to help you with your debts through making plans of either short or long term goals for you to follow. The only thing that should be done is for you to have the discipline in keeping yourself from spending too much and save more of your money and soon invest at the right time.

Suggest ways– if you are losing hope of your debts to be solved, the responsibility of a financial adviser is to keep suggesting ways for you to step up your game in paying your debts. There is no better way in doing it but to pay it slowly and on time to avoid any extra charges.

The benefit that you can gain from financial advisers.

Another good reason why you definitely need a financial adviser is that they help you reach your goal. They break down all of your wants and needs and have you compare and makes you decide as to which is better for you to do. They can discuss to you a series of the timeline that you can see and envision yourself for the next five to ten years. They can explain to you how important it is to have savings and invest it at the same time for your benefit as you grow older.

Did you know?

People who are provided assistance by financial advisers are grateful after many years because almost all of the life goals are coming true and they are living with it as well. if you want to be one of those people who are financially stable and freed, perhaps having to pay off your debts and minimize yourself from getting involved with debts is a good start for you towards your financial goals to come true.