StepChange #debtmyths

Former_MSE_Wendy
Former_MSE_Wendy Posts: 929
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edited 21 January 2014 at 4:11PM in Debt-free wannabe
Welcome to the new DebtMyths thread by StepChange Debt Charity (formerly Consumer Credit Counselling Service). We'll leave them to explain the idea but do let us know what you think...


Hi everyone,

Sometimes it can be very hard to get the truth about debt. At StepChange Debt Charity (formerly CCCS) we hear so many stories that clients have overheard down the pub, on the bus, or found on the web that are, to be frank, rubbish!

So we’ve been asked by MoneySavingExpert.com to help guide you through some of the myths that surround money and being in debt.

Each weekday afternoon we’ll tweet a common debt myth on the MoneyAware Twitter channel (which by magic will also appear on the MSE Debt Problems page) and then debunk it on this forum thread. You’re very welcome to add your own thoughts, myths you’ve heard, or ask us questions.

If you’d like to retweet us we’re using the hashtag #debtmyths on Twitter.


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Comments

  • StepChange_James
    StepChange_James Posts: 861 Organisation Representative
    edited 27 November 2012 at 9:25AM
    The myth:

    An IVA is a magic solution to sort out my debts #debtmyths

    The reality:

    A lot of people try to research debt solutions before contacting us, something we actively encourage. However, as anyone who’s ever googled a medical condition will know the web can sometimes give you iffy information.

    Just like you can convince yourself that your stubbed toe could lead to needing your leg amputating, searching online debt solutions can convince you that IVAs are a great idea.

    Don’t get us wrong, IVAs can be an appropriate solution, but only under the right circumstances. The problem is that there are companies out there that are willing to promise you all sorts to get you to agree to one. You’ll be told an IVA is ideal for you by someone who barely knows your finances and hasn’t looked into your situation.

    As with all debt charities (see http://www.moneysavingexpert.com/loans/debt-help-plan for a full list of recommended organisations) we go through your current situation as a whole, checking your income and expenditure in detail, and recommend the debt solution that’s best for your individual circumstances.

    Have you ever been “sold” an IVA by someone who didn’t understand your finances?
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

  • StepChange_James
    StepChange_James Posts: 861 Organisation Representative
    The myth:

    I only need to pay the minimum payments on my card to clear it #debtmyths

    The reality:

    If you’ve got £3000 balance on a credit card and pay off the minimum payment every month you’ll still be paying it back 28 years later. Most mortgages don’t last that long!

    Many people think that repaying the initial minimum payment - £71.50 (assuming a 17.9% APR on a £3,000 debt) will clear the credit card debt in about 4-5 years (41 months of £71.50 equals about £3,000, then add on a few months for interest that you think you’ll accrue).

    However, because of compound interest on credit cards the amount you pay back falls each month, while the interest rate continues to add on costs.

    You need to be aware of this when borrowing on a credit card and ask yourself, before spending on it, can I afford the repayments, and can I repay a higher amount than the minimum each month (preferably all)?

    Have you ever got stuck in the minimum payment trap?
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

  • StepChange_James
    StepChange_James Posts: 861 Organisation Representative
    The myth:

    Overspending is the main cause of debt problems #debtmyths

    The reality:

    It’s easy to think that people who get into financial difficulty have got there because they’ve been daft with their money, frittering their cash on handbags and plasma screen TVs.

    However the reality’s very different; the main causes of debt are job losses or pay cuts. We've an infographic that shows the difference between the perception and the reality: http://www.stepchange.org/infographics/causesofdebt.aspx#.ULY1t4dg95o.

    Do you think people with debt problems are unfairly judged to be bad with money?
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

  • Hi James

    There's some good tips on here .... just wondering if it could be made a sticky?

    Unfortunately, it quickly falls down the board / off the first page and therefore probably isn't reaching as many people as it could.
    Grocery Challenge £211/£455 (01/01-31/03)
    2016 Sell: £125/£250
    £1,000 Emergency Fund Challenge #78 £3.96 / £1,000
    Vet Fund: £410.93 / £1,000
    Debt free & determined to stay that way!
  • We can't make this a sticky unfortunately rising from the ashes, we've a few already on DFW and we try to limit the no.

    We're lucky enough to be getting a new post every day though so the thread will keeping getting bumped up the list :)
    *** Get the Martin's Money Tips Free E-mail at www.moneysavingexpert.com/tips ***
  • Yup, there are a few!

    As the boards are really busy (which is great!) it unfortunately it does drop down really quickly - I know I didn't see it at all yesterday (and I'm around a lot just now as off work!).

    Could another post with a link be added to one or more of the current sticky threads? (Maybe Fermi's really useful "Newbie's Guide" one?)
    Grocery Challenge £211/£455 (01/01-31/03)
    2016 Sell: £125/£250
    £1,000 Emergency Fund Challenge #78 £3.96 / £1,000
    Vet Fund: £410.93 / £1,000
    Debt free & determined to stay that way!
  • fermi
    fermi Posts: 40,546
    First Anniversary Combo Breaker First Post Intrepid Forum Explorer
    Forumite
    I've temporarily added a post for now.

    Really need to have a bit of a reorganisation on the stickies, but as Wendy says, to keep the board usable and accessible on a busy board like this the number is strictly limited.
    Free/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB

    IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed
  • Thanks fermi :)
    *** Get the Martin's Money Tips Free E-mail at www.moneysavingexpert.com/tips ***
  • Lensman_2
    Lensman_2 Posts: 1,506
    First Anniversary Combo Breaker
    Forumite
    A suggestion for a tip.

    Doorstep collectors.

    Most people - especially those spiralling in to debt and not dealing with it yet - live in fear of the "doorstep visit". Commonly they will have spoken on the phone to some careless DCA representative that will have suggested that a doorstep "visitor" has rights - sometimes the same as those of a bailiff.

    So my suggestion is an official outline of what rights a "Doorstep Collector" has and doesn't have. And whether paying them money will help your case.
  • StepChange_James
    StepChange_James Posts: 861 Organisation Representative
    Good suggestion Lensman.

    I have a sneaking suspicion there might be a debtmyth about doorstep debt collectors next week (wink, wink).
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

This discussion has been closed.
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