StepChange #debtmyths

StepChange_James

The myth: Spending diaries are a waste of time! #debtmyths

The reality:
Creating an income and expenditure budget can be very tricky for some people (but we’ve got a blogpost that gives tips on how to plan a budget). If you don’t know how much you spend day to day then a spending diary can be the only way to keep track of where your money goes.

While I’ll not pretend that this is an interesting or exciting job, keeping a notepad where you jot down all your spending is a great way to fully understand what your money goes on. It’ll help you to create an accurate budget and mean you fully understand what’s going on with your finances.

It’s not just that it helps you keep track though. Just the act of having to write down your spending is likely to give you a little reminder to keep a tighter control of your purse strings and encourage you to be a bit more thrifty.

So it might not be the most fun thing you’ll ever do, but keeping a spending diary could really make a huge difference!

Former_StepChange_Rachel

The myth:

You can treat hire purchase debts like any other #debtmyths

The reality:

Hire purchase agreements basically mean that the item you’ve bought on finance doesn’t belong to you until you’ve finished making the payments. So if you start making reduced payments then you risk losing the item you’re paying for.

That’s why we treat hire purchase policies differently to other debts. Provided the item you are paying for is essential (such as a car needed for work) then we’ll treat the payments as a priority when working out your budget and then see what’s left over for the other, unsecured debts.

Hire purchase isn’t the only way you can buy a car on finance. If you’re struggling with payments it’s important to know the difference between this and other finance methods. Luckily we’ve got a blogpost that’ll help you work out if your car is on hire purchase or not.

Former_StepChange_Rachel

The myth:

You can’t have a social life if you’ve got debts to pay #debtmyths

The reality:

Don’t get me wrong here: I’ve advised plenty of people to cut back on what they spend on nights out to pay more to debts. The point I’m making is that you don’t need to spend loads of cash to have an active social life.

DebtFreeWannabe is a great place to hear about other people’s thrifty ideas for enjoying yourself without going over your budget. Here’s a few of ours:

• Invite friends round for tea instead of nights down the pub

• Have movie nights in the house rather than trips to the cinema

• Pick up a thrifty new hobby, like restoring old furniture, sewing or creative writing

• Go for a walk in the countryside (or perhaps the local park) and get some fresh air; much better than being holed up in a bar

Having to repay debts can mean rethinking what you do in your social life but it doesn’t have to mean your social life is over!

StepChange_James

The myth: If I move abroad my debts can’t follow me #debtmyths

The reality:
Jumping on a plane and disappearing into the sunset is a tempting thought (particularly during the cold winters!) and many think that this is a way to get out of repaying debts.

The truth is that most countries have a reciprocal agreement with us, which means that your debts built up in this country can be enforced through the legal system of the country you move to. There are also specialist international debt collectors who buy up debts to chase people who’ve moved abroad.

There are lots of myths about tricks to get out of repaying debts. You can read more of them in our article: “Can you run away from your debts?”

StepChange_James

The myth: Debt repayments are more important than household bills #debtmyths

The reality:
When deciding if a payment is a priority or not we look at what would happen if you don’t pay it. Miss gas and electric payments for long enough and you’ll be risking sitting in a dark and cold house. Don’t pay rent or mortgage and you’ll not even have a house to sit in anymore.

This is why we call household bills priority payments (read our handy graphic about priority bills). They’re the things that should be paid for first, alongside transport and food costs. It’s not that we don’t think debt payments are important but we just think they’re not as important as these essentials.

If there’s not enough money available to pay everything then it’s important to keep up with payments on priority bills wherever possible and often the only way to make this possible is to pay less to your debts.

If you’re faced with this sort of decision it’s a good idea to get some advice. Our online advice tool, Debt Remedy, can help you plan out your finances and give you recommendations about what debt solutions would suit your situation.

Former_StepChange_Rachel

The myth: Everyone on benefits will be moved over to Universal Credit in April 2013

The reality:

We’re perhaps stretching the boundaries of what is a debt myth here but we know that many people dealing with debts are worried about their benefits changing in the next few months.

There are lots of people who will be worrying prematurely though. Universal Credit is being introduced in April but only for certain new benefit claims within the “pathfinder” area of greater Manchester. Then in October 2013 new claims for the whole country will be processed under the Universal Credit system.

Current benefit claimants won’t be moved over to Universal Credit until April 2014 at the earliest and some may not be processed until 2017. If you’re worried about any of the upcoming changes you can read more in our benefit changes in 2013 article.

Done

So the head honcho of Step Change is Lord Stevenson?

HBOS wrecker? Has he got the cheque book?

http://www.thirdsector.co.uk/Governance/article/1178320/analysis-caution-paramount-when-recruiting-trustees/

http://www.charity-commission.gov.uk/Accounts/Ends30/0001016630_ac_20111231_e_c.pdf

rizla_king

Done wrote: »

So the head honcho of Step Change is Lord Stevenson?

HBOS wrecker?

Wrong Lord Stevenson. :doh:

This one http://en.wikipedia.org/wiki/Wilfrid_Stevenson,_Baron_Stevenson_of_Balmacara

Not this one http://en.wikipedia.org/wiki/Dennis_Stevenson,_Baron_Stevenson_of_Coddenham

StepChange_Private_Messages

The myth: You've not got a problem if you're within your limits #debtmyths #debtawarenessweek

The reality:

One of the danger sings of having a debt problem is going up to (or over) your limits on credit cards and overdrafts. So even if you're staying within your limits you could still be at risk of getting into difficulty with your finances. A frequent regret we hear from our clients is that they wished they'd taken debt advice sooner, rather than using further credit because they thought they could manage.

There were five debt danger signs, you can see how close you are to a debt problem by trying our new Debt Danger Signs tool http://www.stepchange.org/DebtAwarenessWeek/DebtDangerSigns.aspx.

StepChange_James

The myth: You can borrow your way out of trouble #debtmyth #debtawarenessweek

The reality:
If you’re struggling with your personal finances then taking out a new loan to help you cope can seem like a sensible solution. Whether it’s a payday loan or a bank loan, the extra money will be handy to begin with but it soon goes and then the repayments kick in.

Taking out a new loan to cover existing debt payments is one of the five danger signs of a debt problem. You can read more in our article about the dangers of borrowing to cover debt payments: http://moneyaware.co.uk/2014/01/taking-loans-to-cover-payments/.