Welcome to Debt Advice Trust Blog

I have discovered that debt and spending is a never ending spiral that can get out of control. When you are feeling depressed or a bit low, it is a very common pattern to treat yourself to a shopping spree. Debt is a very disheartening circumstance to be in.

A shopping addict will apply for several credit cards and store cards, will not think of them as ‘real money’ and go out on a compulsive spend, often purchasing many items they do not need. They will then receive the bill, become low and go out again to combat the depression.

Compulsive shopping or spending is also known by the scientific term 'oniomania'. Debt can take the glimmer from life. Getting Debt Help is the first step to becoming debt free.

Being able to curb your spending is the first step. If you was on a diet, you would stop going to MacDonald’s, the temptation is to overwhelming, so it is probably a good idea restrict yourself from going anywhere near a shop.

Debt Help should come in the form of free impartial advice. There are 'not for profit' organisations and charities that want to help you find the right Debt solutions.

I am a smoking; ironically I am also in debt. I have always thought of smoking as an expensive habit, but until today, I never realised the extremity of wasted money. I t really is in comparison to reaching into my pocket, pulling out a five pound note, and setting it on fire.

I scoured the internet for a calculator to inform me of the
cost of my addiction and the results, based on one packet of twenty a day, average price of £5.20, were £1898 a year.

To start getting out of debt, I need to become smoke free. There is help out there to stop smoking, but there are also little known debt charities. Debt Helpshould come in the form of free impartial advice. Stopping smoking is one of the first steps to becoming debt free and continuing to be so.

If you have the constraint not to spend it, how about putting the money every day, that you would spend on a packet of cigarettes in a jar, and watch the money mound up.

As house prices continue to scale upwards, the middle class are faced with two options, debt from an over-inflated mortgage or a council house.

London Borough Council has been flooded with applications for social housing as families seek accommodation options that they can afford.

Many middle class professionals are finding it more and more difficult to cope with Debt accrued from a lengthy mortgage. Add to this the increases in council tax and stamp duty and even more are handing in the towel and seeking alternative accommodation.

As the housing market demands more and more from buyers, those with their hearts set on owning their own home can expect mortgage rates to increase, and by 2026 a foot on the property ladder will demand ten times the average salary.

London’s increasingly high prices are making it impossible for people to live and work in the capital, as the country becomes divided between the ‘have-nots’ and the ‘have-lots’. The only way to keep the country balanced is to increase the number of homes available for social housing.

London Councils calculate that at least £1.3 billion is needed to supply additional homes for families in the capital. This price will cover 70% of accommodation needed for social housing. Compared with 2006-2008, the amount needed to help curb homelessness has increased by 50%.

Total UK personal debt at the end of December 2007 stood at £1,409bn. The average Joe in the UK now sees over half (53%) of their monthly income swallowed by debt repayments. Repossession leapt 30 per cent in the first six months of this year compared with the first half of last year. County court judgments rose 32. 5 per cent and personal insolvencies in England and Wales 33 per cent to more than 62,000 last year.

A spokesperson for MoneySavingExpert.com has advised the public to use balance transfer deals, giving them an interest-free year to pay off credit card debts This is all fine a dandy if you are just in debt with credit cards, but if you are any thing like me and owe money to:

1. Credit Card companies
2. Loans
3. Utilities
4. Catalogues
5. Mortgage

Then a debt consolidation loan may be the answer. A Consolidation Loan can help reduce your repayments and make your overall debts more manageable. But it will also extend your repayment period.

Below are quotes from people who found light at the end of the tunnel with a debt consolidation loan:

“My debt by this point had ballooned to around £25000 including the car financing and I was starting to find things difficult getting ends to meet so I arranged a consolidation loan with which eased some of the pressure”

“Things just started to get out of hand. I owed money for five credit cards, unpaid utilities, vets bills; the list goes on and on. I got a Debt consolidation loan and my monthly outgoings were literally cut in half”

Tina Johnson desperately wanted to own a car and was thrilled to bits when she obtained finance for a £7000 Rover but this sum turned into £21,500 worth of debt before she had even driven it away.

Tina was unable to take out a standard loan as her credit record had been damaged by an old catalogue debt so her car dealer referred her to a finance company specialising in loans for people with adverse credit ratings.

The finance company informed Tina that she would have to take out payment protection insurance, guaranteed asset protection and a warranty for her car.

These three additional costs along with a whopping 42.5% interest rate elevated the five year loan. The price of the car was £7,080 but £3,228 was added to this figure in payment protection insurance.

It was these add-ons, coupled with the 42.5% interest rate that pushed the cost of the 62 month finance package to an enormous £21,540.

Several months after purchasing her car, it was involved in an accident and considered a ‘write off’. Tina recouped the value of her car through her insurance but the guaranteed asset insurance did not cover the amount of money that she owed to her lenders who were still demanding £13,500 for payment protection insurance and the credit agreement.

Anyone who is considering taking out a car loan should check exactly what they are being charged for to avoid driving into debt. Don't end up paying more in interest than what your car is worth, as you could find yourself seeking an IVA or Debt Management Plan once the repayments start getting to hard to keep up with.

We’ve all seen the ads charming you into ‘switching your debts into one, affordable lower monthly payment’ but are consolidation loans a good idea?

When you have a multitude of debt and creditors are holding out their hands in every direction, the simplicity of simply rolling all of your debts into one affordable, monthly payment can seem like heaven. You get your creditors off of your back and can simply relax, knowing that you only have to find one fixed sum per month for the life of the consolidation loan.

A consolidation loan is an ideal debt solution for many people as long as it is used properly. Many people fail to read the small print or do not look at the wider picture. Don't start a consolidation loan until you've investigated all your options, as something like an IVA may be more suitable.

It has been estimated that seven out of ten people are able to pay off their debt consolidation loans early but fail to realise that early settlement can incur penalty charges. Secondly, people using debt consolidation tend to run up other debts beside the loan. The temptation of a new credit limit on those nearly cleared credit cards is hard for many to resist.

Having your bag stolen could leave you in debt for at least six days as it is a lengthy business cancelling credit cards, filling in paperwork and paying for new keys to be cut.

When emptying out the contents of one man’s briefcase, in comparison to a woman’s handbag, it was surprising to find that a man would suffer more financial loss if he were to have his briefcase stolen.

Nearly three quarters of men carry bags in some form, whether it is a briefcase, rucksack, satchel or even a supermarket carrier bag. These are filled with approximately £319 worth of goods. Woman shoulder the contents of a smaller £255 worth of items.

Having said this, what about the bag itself? Many people are partial to the odd designer label and will spend anything from a few hundred pounds to a thousand pounds to clasp a piece of class.

An expensive handbag left on the front seat of a car is a sure fire way to lose it. Some insurance companies provide cover for up to £300 for the loss or damage to a handbag and its contents but if you are uninsured, you will be left with the debt on your shoulders.

We often carry expensive items with us which may have cost us more than we could afford. This could give the wrong impression to a thief who may believe that these items can easily be replaced. Always keep valuable items well concealed and attach them to your shoulder or hand as though they were sealed to you with glue to avoid making yourself a target to theft. Simple precautions could save you having to go through the stress - not to mention causing yourself unnecessary debt problems.

If you’ve been using unsecured loans and credit cards as a temporary fix to your debt problems, this could be the year to break the cycle and get your finances sorted!

Unsecured Loans & Credit Cards in 2008

The Bank of England are warning that unsecured loans and credit cards will get harder to obtain this year as lenders start implementing tougher criteria. If you’ve got a bad credit history, chances are this ‘credit crunch’ will make it harder to find a good loan and credit card.

So what can you do about it? Start managing your finances differently so you’re not relying on credit cards and loans to survive. Work on paying off the ones you have and look at ways to increase your income – and if you haven’t got a budget, I can’t stress how important it is to make one. If you’ve been relying on credit cards and short term loans and are finding you just can't get out of debt – another loan is not the answer!

Debt advice can give you answers on how you can start getting rid of your debt problems – and start getting rid of credit cards and loans for good!

Everyday, people call the Debt Advice Trust asking for answers on a wide range of debt issues. The festive season may be over for another year, but how long are you going to be paying it off? If you put most of your Christmas expenses on credit, you'll probably be asking:

“What is the quickest way to clear my credit card debt?”

It only takes a second to run up debt on your credit card - but can take years to pay it off. This is a fairly simple question, with a fairly simple answer - although it can be hard in practice to clear debt:

Don't increase your credit card debt by continuing to spend! Cut up your cards if need be. Make it your New Years challenge to live within your means without taking out a new credit card or spending on ones you already have.

Make paying it off your priority! Consider if you can cut back somewhere on your expenses and use that money directly to pay it off, for example if you buy a magazine once a week, give it up for six months and read online magazines or borrow them from friends or the library. That extra few pound a week can make a big difference when you multiply it over a year.

Should you Consolidate? If you have high interest credit cards and short term loans, you could think about consolidating them with one debt consolidation loan. How does it work? You find a loan with smaller interest and smaller monthly repayments and pay off all your individual debts so you just have one loan to pay back. Talk to the Debt Advice Trust for advice on whether it will help with your debt.

So you budgeted for Christmas, did the best to stick to it, and still worried about how you’re going to afford those credit card bills that could hit your letterbox at any day now?

Well, don’t. Worrying about your debt problems isn’t going to solve anything, but taking action will. If your debt was quite small pre-Christmas and you have overspent during the holiday season, you may only need a debt solution like a debt consolidation loan.

How does debt consolidation work?
Consolidated loans work well if you have multiple debts to several creditors and the interest rates are getting out of hand. You should first tally up the total cost of all your debts, then start looking for a loan with a low interest rate that can cover the amount you need. Once you have gotten your consolidated loan approved, you use the money to pay back all your individual debts and concentrate on just paying back the consolidated loan.

How would a debt consolidation benefit me?
The purpose of the loan is to give you a lower interest rate, smaller monthly payments, as well as reduce the amount of stress that comes from paying and negotiating with multiple creditors.

How do I know if consolidation is the best debt solution for me?
Debt consolidation is best suited for smaller debts. If your debt is over £10,000 you may be better off with a Debt Management Plan or IVA (Individual Voluntary Arrangement). If you’d like to get advice on if a consolidated loan will help you become debt free, contact the Debt Advice Trust today.