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When Debt Turns To Despair

Donna Werbner

By

Donna Werbner

My latest blog

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11 November 2008

Published in Get Out Of Debt on 11 September 2008

The credit crunch is driving more and more people into debt. So what are the warning signs you need to watch out for? And how do you cope?

Sadly, the terrible impact of the credit crunch is becoming more and more obvious.

Several stories were published this week about desperate debtors who have committed suicide (not to mention murder) after failing to see a way out of their financial troubles. And those are just the people we hear about. There may be many other thousands – if not millions – of people who are suffering in silence.

The Samaritans, for instance, tell me that the number of calls to their city branches have risen significantly in recent months, as even high earners (and the bonus-loving Cityboys who got us into this mess) feel the pinch.

Meanwhile, debt charity Credit Action claims the debt problems people call in about are much more serious than they were a year ago. In fact, I'm told some callers are in such a state of despair that they have called up to get advice while holding a loaded pistol in their hands.

Unless you’re on the frontline, like these charities, it’s all too easy to read statistics like “repossessions by mortgage lenders are up 48% in the last year” or “applications by homeowners for insolvency increased by 17% in 2008”, and not see the thousands of personal, human tragedies they involve.

The warning signs

Anyone can fall into debt. The question is, at what point does it become a serious problem?

According to our recent podcast, The Truth About Debt, the key warning sign that you are at risk of falling into serious debt problems is the discovery that you are borrowing just to keep on top of your monthly expenses. In other words, you are paying for regular outgoings using credit cards or an overdraft because you are exceeding your income every month.

The moment this starts to happen, it is wise to seek help. First of all, fill in this statement of affairs calculator. This will help you to see more clearly where your problems lie. Then, read 76 Foolish Ways to Save Money to see if you can cut down your expenses in any way. You could also consult Fools on our discussion boards to get tips on Living Below Your Means, or read this post  by a fellow Fool.

But what if cutting back is simply not possible? What if the situation is already quite serious, and you are being hassled by creditors or mortgage lenders? What should you do then?

Get help

First of all, be careful about who seek help from. Many companies will try to take advantage of you while you are in this desperate situation. For example, some unscrupulous insolvency practitioners may try to convince you to enter into an expensive and unsuitable insolvency agreement. Similarly, if you’re a homeowner who is facing repossession, you may also be offered the chance to sell your home and rent it back. This is an extremely dangerous way to get out of debt.

There are, however, three really good places to go to in order to get help. You can do all three simultaneously – and none of them will cost you a penny:

1)      Post on our Dealing With Debt discussion board (read this message to find out how to do it). Over the years, many thousands of people have been helped by the extremely knowledgeable and kind Fools who post on these boards: there’s at least one bailiff posting there, many other posters have  learned the hard way from their own mistakes. For example, this is a really useful post on harassment by debt collection agencies, and this is a heart-wrenching post on why suicide is not the answer. You can find some more really useful posts here.*

2)      Consult a debt charity. I recommend:

The Consumer Credit Counselling Service, at least, should be able to provide practical help as well as advice. They can speak to your creditors on your behalf and try to negotiate a solution for you, so that you can make affordable payments and still pay off your debt. If you are struggling with your mortgage, for example, they can speak to your lender and ask them whether you can reduce our payments to a more affordable level or take a payment holiday. Most importantly, they will sit down with you and go through everything you owe and explain all the jargon.

Like many of the Fools on our Dealing With Debt board, they’re on your side, and they are experienced at dealing with the highly complex and stressful situation you are in. And remember, their advice is 100% free.

3)      If you are deeply in debt, you are no doubt under a lot of stress – and it is often this stress which drives people to despair. If you feel depressed, don’t suffer alone. Contact counselling charities Mind or Relate for practical advice on how to deal with the emotional fall-out of debt. Don't ignore it or bury your head in the sand, because inevitably this will only make the situation worse.

It's not easy to face up to debt, and sadly there's no magic button you can press to make it go away. But there is always an answer to any debt problem and that answer should never be suicide. So hang on in there. And remember, you're not alone. Your fellow Fools can help you, debt charities can help you and, most importantly of course, you can help yourself. Just don't give up hope!

*Thanks very much to Fools Millsee, SelfDoIt and everyone else whose posts I have linked to. 

More:Listen to our podcast The Truth About Debt | Visit our Dealing With Debt discussion board!

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

churchill123 12 Sep 2008, 8:13am

I don't think the credit crunch is dragging people into debt. More often than not these individuals have borrowed and lived beyond their means, and now find that they can borrow no more, so they're experiencing their own personal credit crunch called 'pay back time'.

Hockeystickchick 12 Sep 2008, 8:26am

Im afraid I dont agree that it was the 'bonus loving city boys' that got us into this mess. People getting into ridiculous levels of debt is a personal choice, the fact that many financial institutions at the moment are all suffering from the bad investment choices they made, doesnt directly equate to people who choose to keep up with the Joneses.
We've all got a brain in our head.

mgy1912 12 Sep 2008, 8:35am

Re: Hockeystickchick. I agree that taking on a debt is a personal choice, but when I took out a small loan from my bank a few years ago I couldn't contact them without being reminded I was eligible to 'top up' my loan by another £5K. I never sought this money, it was being thrust at me by a bank which was going to collect on all those lovely bundles of US mortgages it had bought into. In my view the bonus loving city boys *do* have a lot to answer for.

churchill123 12 Sep 2008, 8:50am

I'm certain that mgy1912 asked themselves the questions:

1. Do I need another 5 grand?

2. Can I afford to pay it back?

The credit crunch has made it harder to for people to refinance their debt, but only those who have more debt than they can afford to carry in the first place really have a problem.

meagherp 12 Sep 2008, 9:14am

People who are in trouble due to circumstances beyond their control are the worst hit and deserve government protection from being re-possessed. You bought a house after many years renting, have a child, then loose your job or become ill. There is no help for such families and they need it.

Zorbutsushu 12 Sep 2008, 9:16am

Yes, getting a loan etc is a "personal choice" but as to asking yourself "Can I afford it" I'm sure that most people who have problems could afford the repayments when entering into these agreements however, the continuing massive rises in the general cost of living means that to a lot of people what was "afordable" is now not as normal living costs are pushing some people into situations where they just cannot live on what they have comming in each month (and that's includes people without any loans or credit cards)

johnc150x 12 Sep 2008, 9:29am

From personal experience, the CCCS are brilliant.
I'm midway through a DMP and the stress reduction is priceless! If you're in a mess, get in touch with them now.

To be honest, if you haven't been "there" you wouldn't understand :o) My problems started with divorce and then an overtime cut followed by wage drop and then another wage drop. It's not only irresponsible borrowing that gets people into trouble y'know.

churchill123 12 Sep 2008, 9:30am

meagherp, whilst I have sympathy for rising costs; we are after all in the same boat, why should other taxpayer s bail you out when you get in trouble with your mortgage? If you take a risk in buying a home, you also stand to gain rewards in the long run. If the risk doesn't go your way, why should taxpayers pick up the tab?

eastender59 12 Sep 2008, 10:06am

I was unfortunately made redundant and now faced with endless calls regarding mortgage payments etc I did not ask to be made redundant and I had been working for 30 years - jobseekers allowance is £60 a week - trying paying gas electric food etc - then you really know how the other half live. As for churchill 123 I was a tax payer for 30 years why should I not get help - hopefully you will never be unemployed

whoucallingcheap 12 Sep 2008, 10:06am

Response to hockeystickchick and mgy1912, it is personal choice to take on debt - as long as things are clear and you understand what you are doing. My elderly state pensioner mother had to declare herself bankrupt last year after getting herself in over £17,000 of debt through pushy storecard tactics and lovely generous letters from the bank offering her loans that the slightest bit of investigation would have revealed she had no chance in hell of repaying. Poor lady was practically starving trying to pay both Peter and Paul out of her small weekly pension before she broke down and told me what was going on! It's an absolute disgrace!!

dburgh 12 Sep 2008, 10:07am

The Media also bear a share of responsibility, they kept urging their readers and viewers to jump on the housing waggon before it was too late. There were all these amateur 'developers' making fantastic profits as house prices rose week by week and many punters were taken in.

PunkFootball 12 Sep 2008, 10:19am

In the article you say "Citizens Advice Bureau (but beware there is a long waiting list)". This is genaralising the facts. Each CAB is an independant charity that operates under the membership of the National Association of Citizens Advice Bureaux (Citizens Advice). Not all Bureaux have long waiting lists in fact many can deal with client issues immediately (especially where they are emergency situations. It depends on the number of volunteers they have available to deal with client issues and what contracts they hold for specialist issues ie debt. It is better to advise people to check with their local CAB first before rushing off to some of the organisations that claim to be helping the clients but are only helping themselves. Citizens Advice services are free at all points and clients will receive the best advice possible.

amalys 12 Sep 2008, 10:30am

I agree getting into debt is a personal choice for everyone and, certainly alot of people who are now over their heads in it (and now want bailing out) only got into debt through their own greed and stupidity. But, as meagherp points out, situations some people end up in are not always their own deliberate fault.
I'm in debt for two reasons.
In 1997 I went to university, but had a child (my little brother whom I'm guardian to) and relied on my student grant (no parental contributions as both parents on benefits), student loan, overdraft and credit cards (every student knows credit cards are thrown at you) to pay for accommodation, food, childcare etc. By end of my first year I was over £6k in debt, more than a student should have but I had a dependant too, and will say none of that £6k was extravagant spending - simple living expenses. Will also state that apart from his child benefit I wasn't getting any other financial support from the government for raising my little brother.
Anyway, I couldn't go on to my second year as I'd borrowed to the max as far as the bank were concerned and was wary of anymore credit cards (still got approved for a Barclaycard but thankfully didn't use it). thus couldn't live on my grant alone. Plan was to take a year out to work to live but I got myself pregnant.
Cutting a long story short I didn't go back to uni as me and the boys moved down south with my partner (who I'd met at uni and he'd graduated) for his job. He worked full time, during day I was a childminder (so didn't need childcare for my own) and in a pub on a night. Over the years £6k debt increased with interest and new borrowing and now 11 years on it's around £4k.
I split with my son's dad in 2004 and have been a single parent since. I've never owned a house and when I worked part time I got a third of my rent paid by housing benefit, working full time I'm not entitled to housing benefit. Basic cost of living is more than my income so I have no choice but to live off a credit card, pay it back then live off it again each month. I pay the minimum off my debt that I can afford, but it's obviously less than it should be.
I went to my local council in 2004 was told the waiting list is 12-15 years for a council house based on my points. I took out a loan for the deposit on a private house and struggled on. Things got desperate again and I went back to the council to beg for a housing association house and was asked why I rented a private house I can't afford. I replied "I can't get a council house for 12-15 years". They'd only help me if I was gonna be homeless and to be homeless I'd have to stop paying my rent. If I deliberately don't pay my rent (regardless of whether or not I can afford it) "I've rendered myself homeless" and the council are "not obliged" to rehouse me. And if they do they'll put me in a community B&B until there's a house available, meanwhile I've to put furniture in storage, find homes for my pets and if the B&B isn't near work or school I have to change them too as the council won't take any measures to house me near work and my boy's schools.
However, if I was an asylum seeker, a pregnant teenager or freshly outta prison I'd get a council house almost immediately, and a community care grant to furnish the damn thing.
So I live on renting privately and on the council waiting list. I've got no security for my boys when they reach 18. I can't drive as that's a luxury I've never been able to afford. And neither me or my boys have ever been abroad cos that's beyond our means too. I've been offered a shared ownership property but I cannot generate the deposit for that either as my credit rating is as shafted as my finances are.
It makes my blood boil when people blame me for the predicament I'm in. All I've ever done is work to give my kids the basics they need. I lived on income support for 2 months but went straight back to work. Was only marginally better off working but at least I had piece of mind that I was working and my kids could see me working for a living.
I have no choice but to keep on doing it and one day I might get that promotion or win the lottery or get some kind of help from somewhere to get out of debt and into a house of my own that I can and WILL pay for...

bambam74 12 Sep 2008, 10:31am

I have been experiencing problems and have found that National Debtline have been fantastic.
I do take responsibility for building up my debts and that I choose to spend HOWEVER it it too easy to get credit and every day i open my e-mail or post or every time I turn on the TV there it is in front of me, ANOTHER fantastic offer from a bank or credit card showing how much better we can feel from a holiday or new car, or a new kitchen or bathroom and how affordable it is. So maybe they should stop forcing all this credit in our face. Many people spend to make themselves feel better and these big companies prey on that.. So they need to be a bit more responsible and allow us to ask for credit when we want it and stop waving it in our faces. It is sometimes hard to say NO.

bambam74 12 Sep 2008, 10:42am

Just to prove my point above, even at the top of this page they are asking you to apply for a credit card as it's such a great deal .........

mkusiat 12 Sep 2008, 11:06am

I think this nation has just been spoon fed with debt and financial support so much many people do not have the patience and mind to SAVE!! If a person plans, sets goals and devise ways to achieve those goals, and set up emergency funds, they would not be faced with most of these debt problems. Planning, working hard, patience and discipline is key. You will only borrow when it's absolutely necessary and you will not over-borrow if you learn and possess the aforementioned attributes and/or characteristics. Be brave to try it and see the difference it makes to your life!!!

churchill123 12 Sep 2008, 11:14am

In reply to eastender59, I fully sympathise. Been unemployed before and supporting a family and know full well the misery of this.

If you need safe housing, council/housing association is the best. The fact is if you take on debt of any kind, and that includes mortages, you take a very big risk that only becomes a reality when things go wrong.

The point you make about paying into the system for 30 years is fair, but it only highlights the dangers lurking with taxation; it usually only benefits the few. If taxes were much lower here, people would have more money in their pockets and wouldn't be forced to resort to borrowing as much.

chrispmorris 12 Sep 2008, 11:26am

At the risk of sounding hard and unfeeling, a large number of those who have found themselves in too much debt and now have related problems, have only themselves to blame. If they have been living beyond their means, and not keeping to a proper budget, they deserve what happens to them. Shakespeare said it well: "neither a borrower nor a lender be, for a loan oft loses both inself and friend and borrowing dulls the edge of husbandry".

I'm sorry for those who have found themselves in dire straits because of circumstances beyond their control, I really am, but there are a lot of people who blur the line between luxury and necessity. You don't need a car, you don't need to have two or three holidays a year, you don't need to have the very latest gagets on the market (yes, some I have talked to have put these as necessities).

Its way past the time to get real and stop blaming other people and circumstances for the misfortunes. And by the way, this Government is the worse culprit of the lot, and Gordon Brown has a lot to answer for, since he has been spending a wasting taxpayers money left right and centre.

avago 12 Sep 2008, 12:26pm

amylis, you seem to have the right attitude in trying to get out of debt. Are you getting all the benefits you may entitled to like child tax credit and working tax credit? If you are not sure, approach your local Citizens Advice Bureau and they may be able to help you or give you some sound advice - for free.

eejaykay 12 Sep 2008, 12:35pm

In response to all those who say that those who get into debt should take the respponsibility and have only themselves to blame, i think you are being 'hard and unfeeling'. I agree there has been far too much of a credit culture, and people are woefully uninformed about personal finance (and hurrah to the Fool for trying to redress that) but whether through unfortunate circumstance or foolish behaviour, blaming people when they are at the end of their tethers is actually destructive. Having been a Samaritan for many years, I know that when people are despairing, the last thing that is of any help is people pointing out what an idiot they've been to get into this situation. They will feel an enormous sense of shame and failure, and be very aware of mistakes they've made. These people will be judging themselves far more harshly than any of the commentators here, which is why debt can lead to despair and even suicide.

This article is about how to take responsibility now, and what help you can get to proactively solve your problems, and I applaud it mightily. We all of us learn from our mistakes, and I wish there were more positive media stories out there about how to not be at the mercy of debt, immaterial of how or why you are in that debt.

churchill123 12 Sep 2008, 12:57pm

Hear Hear eejaykay. I don't think suicide and murder and the anwers.

Back to the topic though, the opening gambit of this article is "...Sadly, the terrible impact of the credit crunch is becoming more and more obvious..."

The credit crunch didn't put ANYONE in debt, and the implication is that if credit was freely available still, that many debtors wouldn't have the debt problems they now have? Totally illogical.

atalayones 12 Sep 2008, 1:02pm

Looking at the volume of replies its a very emotive subject - we are in debt stupidly through propping up a business and now stand to lose the lot - baillifs have already called trying to repossess domestic things( even though it is a ltd company ) and its causing mush distress - as well as being encouraged to borrow to fund the business we were merely trying to make a way in life by being enterprising and trying to pay our way ( no rich family etc to rely on ) I think the attitude of people to those in debt stinks ( sure some have been irresponsible but you are tarring everyone with the same brush as the media so often does ) and therefore by the grace of god go I should be the watchword as anyone can all too easily go from security to finding yourselves in debt all to quickly Why isnt anyone having a go at Fannie May Mac Northern Rock Lehmans for getting into debt - oh no we are all going to have to bail them out with taxpayers money no doubt - thats what sucks so much - average hardworker in the street left to go under as usual - it doesnt help society at all - every man for himself I tell you divide and rule a politicians watchword has worked beautifully - what a selfish society we have become!

billyboy121 12 Sep 2008, 1:24pm

Eejaykay well put and the very sentiment I was going to express. I'm a saver rather than a spender, having been in debt as a young adult for a short period, which I absolutely hated. Consequently I sympathise with those who are locked into a situation of debt. Truth is, we all make mistakes or have things happen to us (e.g. get pregnant unplanned as amalys did) and sometimes that change in circumstances can lead to a situation spiralling way out of control. It's all very well to people like Churchill 123 and hockeystickchick sit there and wag the finger at these people, but if something happened to them in life that wiped out their savings, then they'd be in the same position, and I'm sure would not appreciate people telling them that it's their own fault and how could they have let this happen.

ustad123 12 Sep 2008, 1:38pm

Christians against poverty....really?? Let's leave religion out of this - the missionaries were good at force feeding religion onto people and so my feeling is that you'll probably get pestered by bible bashers if you make the call.

churchill123 12 Sep 2008, 2:45pm

Billyboy121 seems to have missed the point. Where in this article or thread does it mention people's savings being wiped out. Those who save tend to avoid credit, otherwise what's the point of saving?

I remember the last recession and the apologists were in full swing then for those who spent well beyond their means and found out the hard way what the inevitable consequences are.

Life goes on, and the grey cloud of debt doesn't go away by simply talking about it, positive steps need to be taken, and some of them can be very painful.

tonytone1 12 Sep 2008, 3:20pm

I'm horrified at some of the comments ref those in debt. I appreciate some have put themselves into that position by living way beyond their means - however the banks have been more than happy to throw money at anybody - even the unemployed - and new, tighter regulations must follow this credit crunch, to keep the banks in line. I do not think that will happen soon as I'm sure that many of the current Government are looking to thier post MP's directorships.

I think an income related system of lending would be ideal. If you earn X per annum then the max, except mortages, you can borrow is Y. I appreciate it is very simplified however this would to us back to the good old days of saving for something.

My best money tip - switching from credit to debit card - that way I always have to know what is in my account.

churchill123 12 Sep 2008, 3:39pm

atalayones: Been in exactly your shoes, and as you say yourself, don't fall for the law of diminishing returns by borrowing to cover bills that can't be otherwise paid.

I am not criticising anybody in debt, I've been there and feeling sorry for yourself doesn't solve problems. A positive mental attitude can be impossible at times, but it's the only thing that will help anyone in a rut.

YES credit has been far too easy to obtain until now, but getting more means storing even more misery for later.

The banks have not twisted anybody's arm, we've been lulled into a false sense of security yet again, amazing only after 15 years or so since the same sort of collapse happened that our present government is trying to convince us hasn't happened again.

No more boom and bust eh?

Well, free market economics seem alive and well to me.

dreamyeyes 12 Sep 2008, 4:05pm

I hate people who criticise those whom are in debt either it be by the recent 'credit crunch' or by any other means! Those people have obviously never been in a situation so despairingly as being up to one's eyes in debt! I know what it is like on both sides of the coin.

I watched a TV prog which I think was called 'The banks never lose' and I have to say I was appalled at how much the Chief Executors of these high street banks pay themselves! On average the get £1.3 million, OMG! how does one justify a salary of such colossal amounts? But then if that news wasn't enough to shock you the commentator went onto say that was not all they got, apparently they also receive at the end of the year a 'BONUS' averaging £2.4 million on top of their salary! Pray tell me what the hell for? It's these fat cats that gambled our money by giving mortgages ten times the salary of those poor unsuspecting people and it is now these poor people who are at risk of losing their homes!

It does'nt stop there with these 'fat cats' all of them went for a breakfast meeting with Gordon Brown and they spun Gordon Brown a right old yarn, because the conclusion of their meeting with our PM was they went away with £50 million of tax payers money which was the start of money filtering into the domain of the 'fat cats'! That was our money for our education, schools, hospital etc., The 'fat cats' then raise their interest rates to the poor unsuspecting customers and 'Bob's yr uncle, they are quids in'! They NEVER lose! We will never see our money again which our PM so willingly gave to these 'fat cats'!

There is also the 4,000 or so young banking executives in London who queue in the pecking order of bonus handouts, these young, trendy executives who obviously have come from good stock and university education think nothing of going into the 'Ferrari' showroom and buying in cash the top of the range ferrari at a cost of £200,000!

The rich get richer and the poor get poorer, and the majority of the reasons why the poor get poorer is becuase of the swindling fat cats who refuse to be interviewed obviously thinking they are the untouchables! We need a modern day Robin Hood to help us out of this terrible time, to help the poor people who have gone through too much stress that it's now giving them suicidal thoughts.

For those who are desperately depressed, please get intouch with one of the really helpful organisations listed above, I did and I am now fighting back. You are better than those 'fat cats', don't let them win - FIGHT BACK!!!

dreamyeyes 12 Sep 2008, 4:20pm

Also just a little footnote, if you have been charged any 'Bank Charges' then please write to your banks requesting they repay you in full.

As we all know the decision will be made in the High Courts, the latest being the motion was in favour of 'The Office Of Fair Trading' but like banks like to do, they are dragging their heels as they are now appealing against the decision. DON'T WORRY, we will win eventually and my theory is we will get an answer in October this year, so for those who have not yet written to your banks, do so now and you will be guaranteed a refund. Go onto the 'Martin Lewis' website for information on how to reclaim your bank charges, he has also put templates of letters you should use if you want to reclaim your bank charges from these 'Fat Cats' GOOD LUCK!

PANADERO47 12 Sep 2008, 5:04pm

Uncanny, is it not, how the world can go to hell in a handcart and yet the banks always emerge victorious? The trouble today is that the lessons of the Great Depression have long been forgotten - mainly because very few are alive who went through it. The 1920s were, like the past few years, a period of highly leveraged speculation and vast credit expansion. 80% of Americans then had no savings at all and borrowed from brokers to buy shares. When the stock market bust came in 1929 the banks introduced a savage credit contraction which is precisely what is happening today. From 1929 to 1933 US president Herbert Hoover then desperately tried every conceivable policy and economic tool to prevent a depression. He should have left office in 1933 a conquering hero but instead left the USA in complete ruins and the Great Depression lasted many more years. So folks the lessons of history are all there but sadly have never been learned. The establishment in the UK (including the BBC) is none to keen to educate us about such issues as the history of debt and money-lending, money supply (the real cause of inflation) and the question of fractional reserve lending (a massive scandal in itself)practised by the banks. So use the internet to find out for yourself - you will be as astonished as I was at what you will discover.

fenemore 12 Sep 2008, 5:51pm

Why is it that people fail to see a "loan" as just another consumer product?

If you enter a shop and are approached by a salesperson, you immediately understand the scenario. He or she will try and sell you something - it is up to you to decide whether or not to purchase it.

Equally if you receive a mailshot from your local DFS offering you a tempting deal in their latest (if not continuous) sale - do you immediately think "they are offering me a new suite of furniture therefore I must purchase it"? Of course you don't - and easy credit offers by the banks should be seen in the same light.

A loan is nothing more than another consumer product, so "Caveat Emptor" applies - "let the buyer beware"!

churchill123 12 Sep 2008, 7:17pm

Indeed fenemore, it seems that people only complain when they realise that perhaps with the benefit of hindsight they should not have bought credit. Then it seems to be someone elses fault when it all goes pear shaped.

Losle 12 Sep 2008, 10:27pm

Makes me laugh to see the phrase "banks have been more than happy to throw money at anybody". Maybe they do. But they also say "you'll pay it all back, and more". It's down to the throwee to decide whether they can afford that.
But yes, it sickens me too that the banks develop this unsustainable economic model and when it all falls apart, it's us that ends up paying for it. And the fat cats still get there bonus - even the Northern Rock board walked away with nice bonuses.

chaz25 12 Sep 2008, 10:46pm

Churchill 123, first post.
how ABSOLUTELY dare you. yes SOME people spend too much.

What about the rest, who GENUINELY can't afford essential bills.

My job went through no fault of my own. If my wife hadn't been working, the HOUSE, CAR
and most of our POSSESSIONS would have gone too. We have 4 children. Yes we could have chosen not to have children, except it was AFFORDABLE then just. We can't dispose of the children, they need food, shelter and clothes, and WE do without to help them get by. We CAN'T afford university, but we send them anyway.

Some people are just absolute b*****ds and have no compassion, let alone thinking of HELPING other people.

AND GORDON BROWN, PLEASE RESIGN, NOW TODAY while we have a chance to have someone with the COMMON TOUCH actually HELP those now desperately in need. How many suicides, repossessions, bankruptcies in FAMILIES do we need before SOMEONE HELPS, eg getting financial institutions to WRITE OFF debts for NEEDY FAMILIES.

ANYONE HAVE A HEART, not COLD BLOOD in their
veins and arteries?

churchill123 13 Sep 2008, 8:30am

What about people who cant afford to buy their own house, and a car Chaz25? Stuff em? Should banks write of your debts because you've decided you can't afford to pay them back anymore?

So you send your kids to University but can't afford it? That's admirable but don't expect compassion.

copperfly 13 Sep 2008, 11:15am

Churchill 123 I agree with a lot of your arguments, but your last comment just lost you my respect. We don't know how how chaz25 are sending their children to university. But we do know their respect for the need for the education of their children is greater than that of being miserly and not caring about it. And their educated children will be more likey to help their parents in the future getting better jobs.

churchill123 13 Sep 2008, 11:55am

copperfly, I don't appreciate being called names by someone who claims to be suffering when in fact they are simply experiencing the life difficulties that we all face from time to time.

They haven't lost their home, they still have their car and they are sending their kids to Uni? I did point out if you read a bit more carefully that I think this endeavour is admirable, but, please, there are people out there who've lost everything, and others who simply have nothing to lose.

When we buy a house, we're making a long term investment. EVERY investment is risky, we cannot expect these things to return every time, it's unrealistic. Plan for the worst and hope for the best. Look at the rest of the world, most of us have absolutely no idea what poverty really is, which is no bad thing.

Now if the article was about how the credit crunch is causing job losses, or how NuLabour have taexed us to the point that people ahave no choice but to borrow beyond their means to live for today to fight tomorrow, and now the credit crunch has ended all that too, chav25 would have a relevant point.

1civilman 13 Sep 2008, 2:51pm

I would like to reasure ustad123 that he will not be pestered by bible bashers if he contacts Christians Against Poverty, as I am being helped by them to get out of debt. They are genuine people who put the person in debt first, and are highly respected by the creditors they deal with. In fact a number of people who are in debt where able to have a holiday at Christmas and since through there generosity, which is funded by people giving to this charity.
People in debt should not be condemed regardless of how they got into debt, they should be shown compassion. By the way I am a taxpayer and have been for a number of years.

5753225 14 Sep 2008, 7:22am

Why do so many people get into financial trouble? Because they are not taught the facts of financial management in school. 40 years ago when I was in school, my parents were telling me that the school curriculum was flawed as this element was missing. As a secondary school teacher, (in 2005) I was covering a Domestic Science lesson, and sitting bored while pupils got on with the work they'd been set by their teacher, I started to read a Domestic Science GCSE paper that had been left on the teacher's desk. One of the questions started thus "Donna has borrowed £2000 to go on holiday..." What?!!! There was no suggestion that borrowing for something so trivial was unwise. Indeed the question suggested that this was normal behaviour. What little financial education our children get appears to be simply wrong.
Why do our children not get good financial education? I believe that it is because our ruling class (yes it still exists) make their money from the City. These people do not want their home market to be sophisticated, they want easy prey. Consequently, 40 years of calls for financial education has resulted in no effective response.

fenemore 14 Sep 2008, 12:18pm

gordonbanks42; I agree, that is indeed the way it works these days. Executive level managers in the banking industry seem to stagger from one disaster to the next without ever suffering consequences. At that level it is bit like Executive musical chairs!

It will probably never happen, but bringing back branch managers with real authority and NO TARGETS would be a positive step to responsible lending.

hoopstar5 14 Sep 2008, 6:11pm

I was really useless with money during university and a few years afterwards and got myself into debt to the tune of £16k.

Once I took my head out of the sand, through my own hard work, determination (and a couple of years living back with my parents which isn't always an answer for others) I now don't have any debt, and amazingly I also have savings.

I truly believe that some people and families have found themselves in trouble because of circumstances beyond their control (and some of the cases here are testimont to this). However on the other hand there are also people who were sucked into the culture of believing it is their god-given-right to own a house, fully furnished with new sofas, kitchens and bathrooms, a car, holidays, the latest computer, TV, phone, gadgets, clothes, not to mention mountains of toys for their children. They purchased everything on credit because it was easy and it didn't feel like real money.

Slowly but surely we've become a nation of greedy hedonists who don't understand the value of money anymore, we've forgotten that every action has a consequence - and this is unfortnately now our just desserts.

We are on the brink of recession and yet we are unwilling, almost incapable of taking responsibility for our own actions - it's so much easier to blame banks. Yes they weren't acting responsibly, but ultimately isn't it is up to us to make the right decision? We are educated to understand certain consequences and learn not to smoke ourselves to death, drink ourselves to oblivion, eat ourselves to an early grave, but seemingly we think we can walk through life spending what we don't have and nothing bad is going to happen.

All I hope is that we learn from these mistakes, we teach our children the value of money, that I want doesn't always get and most of all personal responsibility for our actions.

fool022 15 Sep 2008, 1:07am

Hi I have just read your article and I would have 6 months ago thought yeah you are right you have a good point...but meagherp does have a good point too....unless you find yourself in a certain situation you just dont know whats around the corner...my ex-partner sneakily stopped paying the mortgage, transferred the correspondence address to one of his relatives addresses, took the family business and runs it from somewhere else and left me and 2 children with the unpaid mortgage,9 months of arrears, 11k of family debt, £1200 overdraft and no income, as i was a partner in the business (but I wont go into that); so there we were with absolutely no idea which way to turn... with no money went to the CAB (fantastic people) had to sign on income support and because of all the topics involved have gone for legal aid to try and get us out of this mess. Its our home and we dont want to lose it...and its the most rotten of things to find yourself in this position caused by someone else ...

fool022 15 Sep 2008, 1:22am

Hi where did I go wrong..

churchill123 15 Sep 2008, 8:48am

Hi fool022,

sorry to hear your tale. All too common in divorce/separation. It seems your estranged is being ruthless and unscrupulous. This can happen to anyone, but is particularly sad when children are victims too. If he's jointly named on the mortgage he still has a duty to pay, whether he lives with you or not. Try and work with the lender to chase him for the arrears, and make sure he knows they'll still come after him for the money as he works, even if God forbid you lose the house. Good luck and give him hell.

Dogsolitude 21 Sep 2008, 4:53pm

Just a quick note to say that I'm cool thanks: I got myself out of debt thanks to following advice from The Fool, and have been trying to find new ways of saving.

After rent and bills, I'm banking everything except a small amount of pocket money.

Having been shafted by the housing market and unable to afford to buy, I'm staying put anyway whilst saving. My rent is less than the interest part of a mortgage repayment, and whereas my flat is a dump I've got some nice-ish furnishings...

Debt, for me anyway, is a bit like smoking. Once I'd got out of the habit and started getting thrifty I realised that I'd been completely ripped by lending companies, banks and also the media.

It's so easy to fall into the trap of feeling pressured into buying certain brands and goods in order to feel part of society. If advertising didn't affect people's behaviour then companies wouldn't spend millions on it. It's designed purely to generate feelings of 'need' and desire.

As such I feel a lot of compassion for people who were similarly ripped off.

If you're under financial pressure, and a bit scared by not having much spending money, I found the following helpful. It's mainly about disconnecting from things that feed the 'must have' metality:

1 - don't watch TV! It's full of adverts and cr@p, and Celebs sporting the 'latest must-have' items (which you probably don't need)

2 - ditch newspapers... I cancelled my sub to Esquire because I was fed up with seeing articles about £3,000 watches and Hugo Boss suits... Instead I surf the web for news and find things out myslef for free. Less recycling to do too!

3 - remember that no one will love you more if you have a certain type of mobile phone/car/TV/games console (I learned that when I got my LG Prada Phone! Nobody else seemed overly fussed about it)

A golden rule:

4 - Shopping is *not* a leisure pursuit. Read, watch a film, surf the net, dust off your copy of Trivial Pursuit...

Since living more frugally I've felt much happier. I am now trying to avoid feeling smug and self-righteous though, as that helps no-one!

The best things in life are largely free, and can't be bought from the local shopping arcade, boutique or car dealer. Sorting yourself out is a big adventure, and if you enter into it with the right spirit, it can be very liberating!

Good luck everyone!

Peace,

DS_UK

crazybucks1 22 Sep 2008, 12:28am

I'm from the US. The economy is now a wake up call for Americans, yet, many still have their heads in the sand. Jobs are closing down all around and people are not willing to adjust, but have to. I decided to cut all but one credit card, refinance my mortgage to an affordable rate, pay now instead of later for things that I want and save. I can sleep at night and smile by day. There's plenty of free entertainment so there is no need to be bored. Also, listening to financial experts, politicians and know-it-alls undermines ones own common sense. Reality should dictate what one needs to do. But of course, greed overrides common sense in some cases. Anyway, life can become easier and less stressful if people face the hard facts that they are experiencing daily.