Past Articles for the Debt Management Category

A fall in disposable income has resulted in two-thirds of Britons running out of money before payday, Abbey has found.

Research by the lender found that disposable income has fallen 29 per cent over the last two years, meaning 64 per cent of the population has had to cut back on socialising or purchases of items such as clothes and cosmetics in order to make ends meet.

Britons run out of money an average of five days before they get paid, with many now spending three-quarters of their monthly income on essentials such as food and rent.

Director of banking at Abbey Steve Shore noted that many were failing to budget correctly.

“With disposable income down and Christmas almost upon us, planning your finances carefully has never been more important,” he explained.

Those struggling financially may wish to follow his advice and implement a debt management plan.

Personal finance website Fool.co.uk recently suggested that men are likely to spend more than women, as they increasingly pay more than is necessary for products.

By Tom Musk

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People need to ensure they have adequate finance in place should they need to take time off work, it has been claimed.

A spokesperson for insurance firm LV= explained that employees need to check with their employer what financial cover they would receive should they be away from the workplace, as not doing so could put them at risk of missing mortgage and bill payments.

“People don’t realise what strain it would put them under if they could not meet their regular commitments,” the spokesperson explained, noting that making sure cover is in place should be part of a “regular review” of their finances.

And she warned that many may not be able to survive without financial income for as long as they might think, stating that the average person would cope financially for no more than two months.

The comments come following a statement from LV= noting that many workers are unaware of the recent introduction of the Welfare Reform Act, which could help those struggling with financial difficulties such as bankruptcy due to being out of work.

By Tom Musk

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A new campaign to help deal with debt problems has been launched by the Scottish government.

Launching this week, the awareness scheme is being led by the Money Advice Trust and will provide free, independent guidance to those looking to improve their financial situation, possibly through the use of a debt management plan.

The Scottish government is providing £382,000 to promote the campaign, which will be spent on nationwide advertising.

Deputy first minister Nicola Sturgeon stated that the aim was to help families across Scotland who are “feeling the pressure financially”.

“The main message we want to get across is for people to take control of their debt, before it controls them,” she explained, adding that people need to do something about their debt “sooner rather than later”.

A book used to explain the importance of finance management to young people has recently been translated into Gaelic for use in Scottish schools.

On the Money was written by four well-known Scottish writers and is aimed at children aged between eight and 12.

By Tom Musk

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Much of the UK’s population is unaware of the financial assistance that may be available to them, one finance company has stated.

According to LV=, recent changes to the Welfare Reform Act mean people could receive financial aid if they are unable to work for long periods of time.

The news could be welcomed by those struggling with debt or facing bankruptcy during the current economic downturn.

A spokesperson for LV= noted that there was a “low level of understanding” of the issue among the consumers surveyed, stating that some may have expected to have been told about the changes by their employers.

“Almost 18 million people across the UK are unaware of financial support that could be available to them” the spokesperson added.

The LV= survey revealed that 20 per cent of the employees questioned did not know how much help they would be entitled to, while eight per cent stated they did not expect to receive any help from their employer if they cannot work for whatever reason.

By Tom Musk

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New rules regarding the sale of payment protection insurance (PPI) are likely to benefit consumers, Which? has stated.

Personal finance campaigner at the consumer rights body Lucy Widenka described the ruling - which prevents PPI being sold to a customer within 14 days of them taking out a financial credit plan - as a “victory for consumers”.

And the banning of single premium polices has also been suggested, a move which has been welcomed by Ms Widenka.

“With the single premium policy it is added to the loan or the credit product itself and then you are actually paying interest on top of it,” she explained, adding that such products have been “shown to cause the biggest amount of consumer detriment”.

Clare Francis of moneysupermarket.com recently noted that PPIs can be useful to those struggling with debt management, as those who have a change in personal circumstances often apply for them to get help with their debt.

By Tom Musk

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Action needs to be taken to discourage people from cancelling pension contributions during the current financial crisis, Axa has stated.

According to research by the financial company, 1.5 million people are considering such a move to free up extra finance, with 53 per cent stating they are planning on doing so to help clear debts or cope with the increasing cost of living.

And Axa figures indicate that should a 25-year-old man stop his contributions for two years, he would be £33,800 worse off when he comes to retire.

Head of pensions and savings at Axa Steve Folkard said a pension break should be a “last resort”.

“If you put £300 a month less into your pension for two years you will have a pension pot that is tens of thousands of pounds short when you retire,” he explained.

Cancelling insurance policies is another cost-cutting method being adopted by Britons, with a recent survey from Fairinvestment.co.uk finding almost a quarter are not taking out insurance, possibly as part of a debt management plan.

By Tom Musk

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The Competition Commission’s recent investigation into payment protection insurance (PPI) has been welcomed by one price comparison website.

Editor of moneysupermarket.com Clare Francis approved of the crackdown on the issue by the commission, which has recommended banks should be banned from selling such insurance to borrowers within two weeks of them taking out a loan.

However, she also noted that the recommendation could be bad news for borrowers, as banks may increase their interest rates on loans as they look to recoup lost income.

And she stated that PPIs can be of use to those who are struggling with debt management.

“The biggest reason for people seeking help with their debts is a change in personal circumstances … and this is exactly when an appropriate PPI policy can prove a wise purchase,” she explained.

An increasing number of borrowers are turning to pay-day loans, logbook loans and pawn brokers for credit as they are unable to obtain finance from lenders, Frances Walker of Credit Action has claimed.

By Tom Musk

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UK employees should bring homemade meals to work instead of purchasing lunches while out of the house, a waste campaign charity has stated.

Julie Falcon of the Love Food Hate Waste initiative said that it “doesn’t make sense” to buy shop-made lunches when ingredients at home can be used to make a meal.

And she noted that while the individual cost of a lunch may not seem like much, it can amount to an “awful lot of money”, especially when people are trying to save during the credit crunch.

“You do have to make a deliberate effort to look into the fridge and see if you could put a lunch box together out of something,” she explained.

Such a tactic may wish to be incorporated into a debt management plan for those wanting to get control of their finances during the credit crunch.

Ms Falcon’s comments follow recent research by Love Food Hate Waste, which found that £5.5 billion per year is being wasted by employees who leave food at home to go off by eating shop-bought lunches.

By Tom Musk

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Those struggling in the credit crunch are considering reusing previous presents as gifts this Christmas, new research has found.

As many as 18 million (39 per cent) of UK adults are considering giving unwanted CDs and toiletries this festive season, figures from CreditExpert.co.uk have revealed.

And 45 per cent are concerned about their financial situation in the run up to Christmas, with one in five risking credit card debt by making purchases on plastic and eight per cent going overdrawn in order to fund their spending.

Managing director of CreditExpert.co.uk Jim Hodgkins urged people to borrow responsibly over the next few weeks.

“It’s important to check your credit report to make sure you have a good credit status,” he advised.

The findings follow previous research from Axa, which suggested credit card use is likely to increase in the coming weeks as people purchase more gifts and food in preparation for Christmas.

By Tom Musk

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Many Britons are scrapping Christmas parties in a bid to save money over the season, new research has revealed.

According to a survey by Yorkshire Bank, 79 per cent of respondents are making the move in order to reduce their outgoings over the festive period, with 82 per cent stating they would rather attend a party than host one.

And many are holding back on buying new clothes in order to reduce the risk of getting into debt, with 22 per cent admitting they plan to wear last year’s outfits to any parties they do attend.

Head of retail banking at Yorkshire Bank Gary Lumby noted that “sitting down and working out a Christmas budget” will help ensure those worried about their finances do not spend outside their limits.

Such a strategy could also be worked into a debt management plan for those who are looking to minimise their outgoings in the coming months.

Meanwhile, those thinking of starting their Christmas shopping have been urged by finance expert Jasmine Birtles to plan ahead in order to reduce the risk of overspending.

By Tom Musk

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