Expert Answers: We’re sinking fast in a sea of debt

Since my husband lost his job, life has been really difficult for us. Fortunately, he got a new job but on much less money.

Some weeks there really isn’t enough. We took out a loan but are now struggling to pay that back too. I don’t know what is going to happen to us.

Debt problems are on the increase in the UK, with many consumers finding it hard to balance the demands of mortgage repayments, credit card debts and the everyday expenses of running a household. With many also dealing with the threat of redundancy or the pain of losing their jobs, it’s inevitable that debt problems in the UK are on the increase.

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The recession prompted by the credit crunch has had devastating consequences for many in the UK, particularly those with debts. Economic conditions in the UK are still highly challenging, with some analysts predicting that the UK will enter a “double-dip” recession, rather than emerging from recession immediately as many people hope. Debt is a fact of life for many of us – an essential way for us to make our money go further and afford many of the key purchases in our lives.

The Consumer Credit Counselling Service was established to help people in situations like yours.

The average client of the service is in their 30es, married with children and with a debt in excess of £30,000 – and it helps hundreds of thousands of people every year.

You will be helped to find a realistic way of sorting out your debts with an agreed and achievable schedule of repayments.

The service is free and you will almost certainly find that your creditors like it because it means they know more of their money will be recovered.

In fact, a lot of the people that use the services of CCCS do so on the advice of their creditors. Increasing numbers of people are facing debt issues as the recession bites harder and unemployment increases.

Struggling with debt and seeing no way of repaying it can be frightening; can destroy relationships and lead to mental health problems – even suicide.

The Consumer Credit Counselling Service (CCCS) is the UK’s leading debt help charity and those it helps generally have multiple debt problems. CCCS has services across the UK either directly or in co-operation with others and help is given online, by telephone or face to face at the various centres.

An online Debt Remedy service operates through the website which provides a plan for managing debt tailored to the individual’s personal circumstances.

Visit the website www.cccs.co.uk for the Debt Remedy Service or call the helpline on 0800 138 1111 (Monday to Friday, 8am-8pm) for help with repaying options including setting up a Debt Management Plan.

Paul Charlson, GP from Brough

When faced with growing financial worries, wanting to run away is a normal and natural response to the stress. However, this won’t make it disappear and may make the situation worse. There is help available and facing the situation is the first step to regaining control of your finances and life. There are some very good web sites which can offer practical advice, support and resources, for example The Consumer Credit Counselling Service www.cccs.co.uk, a non-profit charity dedicated to providing confidential, free counselling and money management assistance to financially distressed families and individuals. Another good source of information and advice worth considering is The Citizens Advice Bureau, they will be able to check any benefit entitlements that might be available to you and also offer advice on debt management. Look them up in your local phone directory to see if they have a branch near you where you can make an appointment and discuss your circumstances in person.

Elaine Douglas, A chartered psychologist who specialises in family and child relationships

The principles are easy in as much as what goes out in terms of bills and other household expenses should not exceed what come in. If it does then you are in trouble as the deficit will widen as time goes on. The difficult bit is working out how you can make your outgoings less than what you earn. There are some things that are fixed or at least that it is unlikely you can do much about, e.g. the mortgage and perhaps loan payments, but you need to look at where you can make cutbacks. This could be a painstaking exercise, but will be worth it in the long run as you will start to feel more in control and therefore less stressed.Look at your utility bills for starters. Can you make any savings by reducing the amount of gas and electricity you use? It may be in your best interest to shop around and see what kinds of deals you could get with another supplier. The same with the phone, TV, broadband and any mobiles. Companies are very competitive these days and you may be able to cut down on these bills. However, your success at doing this will depend on your state of mind and how you approach it.

Cary Cooper, Professor of Organisational Psychology and Health at Lancaster University

What is important is that you both take some control over the situation you find yourself in. It sounds to me like you haven’t talked to your husband about your fears. This is the starting point. You need to create the psychological space to discuss this with your husband honestly, letting him know what your fears for the future are. Then you both need to think through the options of dealing with this situation. There are always options, like you taking on a part-time job, or for him looking for another job or considering further training in a different line of work that will eventually lead to a better paid job. By looking at options you are taking control of events rather than letting events take control of you.

Dr Carol Burniston, Consultant Clinical Child Psychologist

I suggest sitting down as a couple and examining your outgoings. You can then distinguish between the essentials (such as rent or mortgage payments, loan repayments, utility bills and council tax) and other expenses which are related to choices you have made (such as gym membership, eating out or the car/s you drive). Once you have worked out which expenses you need to prioritise, you can compare it with your income and work out what is left. This will give you an idea of what you can put aside on a regular basis for larger expenses such as insurance and a small contingency fund for emergencies. It is often surprising what we spend without even thinking as small items can often add up to significant amounts. You don’t mention whether you are working outside the home or whether you have older children living with you. Both of these areas could be a source of extra income. You may be able to renegotiate your mortgage and include the loan you have taken out, which may reduce the interest you pay. I advise trying to pay off high interest expense first as this will save you money in the long run.

Plan Carefully To Cut Costs

Think about your shopping bills. Plan your food shop more carefully to avoid waste, cook things from scratch rather than buying convenience foods. Buy supermarket brands rather than named items. Think about how you could buy less fuel. For example, some supermarkets will deliver goods without charge, saving you petrol. Do you need to change your insurance or utility company? Look on comparison websites. Think about using charity shops for clothes and some household goods – you can get bargains. Use a spreadsheet on your computer to keep track of it all.