MORE people are struggling to stay on top of their budgets as the higher cost of living takes it toll.
Samantha Brook, 48, from Ipswich, Suffolk found herself in thousands of pounds worth of debt five years ago.
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Since then, she has manged to get on top of her financial situation and says others can do the same as she has.
The learning and career coach says: “I think spending is an addiction. It’s a cycle and you beat yourself up and you feel rubbish after.”
Samantha first had problems with debt when she was 17 and would spend to keep up with friends. The problem quickly spiralled out of control.
In her early 30s she was given a clean slate after her mum intervened and paid off all the money she owed.
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But to Samantha’s dismay she gradually started to slip back into the red, spending money on meals out and clothes that she couldn’t afford.
As a self-employed worker, she also spent the money she should have saved to pay her taxes.
By the time she was 43 in 2018 she owed £18,000 on credit cards, bill arrears and unpaid taxes to HMRC.
She says: “I had promised I wouldn’t get back into debt. I felt really ashamed.
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“I was really worried about money and just felt hopeless. I was feeling like there was no way out.”
She attended debtors anonymous, a 12-step programme for people looking to recover from compulsive spending and debts.
The group works in a similar fashion to other addiction forums where you share details of your experience.
But it does not help you pay off debts directly like other charities and organisations, which can help you negotiate repayments with creditors or write off debts through a form of insolvency known as an IVA.
“The programme helped me to understand where my addiction came from,” explains Samantha.
Samantha then decided it was time to get a grip on her situation once and for all.
She set a resolution to get out of debt and followed through by repaying at least £1 a month to all her creditors.
She says: “I was determined to pay off my debts. The most important thing is taking action – even if it’s only small at first.
How to cut the cost of your debt
Being in a large amount of debt can be really worrying. Here are some tips from Citizens Advice on how you can take action.
Check your bank balance on a regular basis – knowing your spending patterns is the first step to managing your money
Work out your budget – by writing down your income and taking away your essential bills such as food and transport.
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs
Pay off more than the minimum – If you’ve got credit card debts aim to pay off more than the minimum amount on your credit card each month to bring down your bill quicker
Pay your most expensive credit card sooner – If you have more than one credit card and can’t pay them off in full each month, prioritise the most expensive card (the one with the highest interest rate)
Prioritise your debts – If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them.
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don’t pay.
Get advice – If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further.
Groups like Citizens Advice and National Debtline can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans
“And be honest with the people in your life. Sharing it and getting it off your chest can be a huge relief rather than keeping secrets.”
Samantha also contacted the free debt charity StepChange and they helped her do a budget and work out her disposable income.
She adds: “They have template letters that you can use to send to creditors and ask them to freeze interest.
“Some of the debts I was able to negotiate a settlement figure.
“I did get phone calls from people chasing money but once I started paying off debts regularly and I had agreements in place they eased off.”
Samantha worked out which were her priority debts and paid off those first.
These are usually classed as taxes, mortgages and other essential services such as energy bills that mean you could end up in prison, lose your home or have your energy cut off if you don’t pay.
She says: “The bulk of the money I was paying off was for HMRC.”
Samantha was repaying around £350 a month and would also use any work bonuses towards debt.
She also moved from being self-employed to employment, which helped her take better control of her finances with a steady income.
Gradually she was erasing the amount she owed and had whittled down outstanding debt to £7,000 by 2020, when an inheritance allowed her to repay all that was still owed.
After this, Samantha managed to build up some savings – though the cost of living and a spell of unemployment has meant she dipped back into the cash.
Now Samantha has three credit cards which she repays in full each month, but says: “I am aware that I need to keep an eye on spending by being strict with myself.
“I still struggle with overspending – It’s a work in progress”
As well as working, she has started the Happiness Club happiness-club.co.uk a group that aims to promote mental wellbeing.
How to pay off debt
If you feel that your money situation has got out of control, talking to someone from a free and trusted organisation is one of the first steps to take.
Citizens Advice is a national organisation with thousands of volunteers who can help guide you into action.
Find your nearest branch using the tool on its website, or contact them by phone on 0800 133 8848.
Charity StepChange also offers free advice. Contact them through their website stepchange.org or call on 0800 138 1111.
Making a clear budget with your incomings and outgoings, including bills and credit repayments, is crucial for getting a grip on your situation.
You can then start to work out how much you can repay and how long it might to take to clear debt.
Always tackle priority debts first – this includes rent, mortgage, energy bills, child maintenance and taxes.
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Depending on your debt situation, you may be able to use the Breathing Space scheme which freezes your interest and any charges or debt collection activity your creditors might take for 60 days.
We have also spoken to someone who had £50,000 of debt but now has a six-figure business.
How to get debt help for free
THERE are several groups which can help you with your problem debts for free.
- Citizens Advice – 0800 144 8848 (England) 0800 702 2020 (Wales)
- StepChange – 0800 138 1111
- National Debtline – 0808 808 4000
- Debt Advice Foundation – 0800 043 4050
You can also find information about Debt Management Plans (DMP) and Individual Voluntary Arrangements (IVA) on the MoneyHelper and on the Government’s Gov.uk site.
Speak to one of these organisations – don’t be tempted to use a claims management firm. They say they can write-off lots of your debts in return for a large up-front fee. But there are other options where you don’t need to pay.
