How to take back control and address the impact debts are having on your finances | Personal Finance | Finance

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Debts have become the modern-day curse as the cost-of-living crisis means more and more of us are struggling with it. But it can be resolved and MoneyMagpie.com is here to point you in the right direction.

According to recent statistics, 65 percent of people in the UK who have at least one credit card owe more than £1,000 on them. That’s aside from the £65,724 which research suggests is the average household debt in the UK.

It would be easy to bury our heads and try and forget about it but figures like this aren’t going to go away which is why MoneyMagpie.com and debt charity Community Money Advice (CMA) have teamed up to help people realise that tackling debt head on is the way to a happier and healthier financial future.

John Franks of CMA admits: ‘Shame and guilt are the main reasons people let their debts escalate and it’s true to say that the earlier people face up to them, the easier it is to stop them spiralling out of control’.

That’s why MoneyMagpie.com is here to help you make a fresh start in 2024.

Are you struggling to pay your basic outgoings like your credit card minimum payments, energy bill and mortgage or rent? Are your debts, excluding your mortgage, bigger than your annual take home pay after tax? You are likely in a debt crisis and while it is frightening, there are non-profit debt counselling agencies (like CMA) that can give you help like Citizens Advice (www.citizensadvice.org.uk) StepChange Debt Charity (www.stepchange.org) or the National Debtline (www.nationaldebtline.org)

They can help you access the breathing space scheme, a two-month period during which all interest and charges on your debt will be frozen and you won’t face enforcement action from creditors. Our new campaign aims to remove the stigma and shame about debt, so don’t be afraid to speak to someone, you are not alone.

If you are consistently spending more than you’ve got coming in, then chances are you are in a debt spiral. You know the sort of thing, a higher and higher overdraft, a bigger and bigger credit card bill. Doing something about it now can stop it becoming a crisis.

Make Savings

It’s easy to say when the cost of living is so high but take a serious look at your budget and see where you can reduce your outgoings. Even small savings here and there can make a big difference annually – stop buying lunch at work and start making it at home and taking it in. It can save hundreds of pounds over 12 months.

It might take a few minutes but check whether you are entitled to claim any benefits. Even if you have an income of £50,000, there may be help out there for you so make a point of checking it out. Go to gov.uk for advice.

If you worked from home because of the pandemic, you were entitled to claim a tax rebate to help towards the cost of increased household bills during the tax years for 20/21 and 21/22. The rules for claiming were changed in 22/23 but you can still claim retrospectively, and it could mean up to £140.

Uniform tax rebate – if you wear a uniform to work then you could be eligible for a rebate. You need to wear a uniform that is branded or shows you are a policeman, nurse etc. and if you are self-employed, instead of claiming via the rebate, you can claim uniform and laundry expenses when filling in your self-assessment tax return.

The standard flat-rate expense allowance for uniform maintenance is £60, by claiming a tax refund you’ll get 20% of £60 as a basic rate tax-payer, which is £12. You can also backdate your claim by up to four years. Depending on your industry, you might get more. Claimants have got up to £200 back so it’s worth a look.

If you’re struggling with mortgage payments make sure you speak to a lender before you miss one because missed payments can ultimately affect your credit rating. They may offer alternatives like switching to interest only for a while or if you’ve been on Universal Credit for nine months you may be able to apply to get help with your mortgage interest loan (gov.uk for more information). Remember, it is a loan but it may be a way to help you reduce your mortgage payments.

Talk to your supplier, according to regulator Ofgem, your supplier has to help you and will usually try and negotiate a payment plan that you can afford. If you prepay for your energy and face self-disconnection because you can’t afford to top up, all suppliers offer £5 emergency credit on your gas and electricity meter. Don’t be one of the 3.2 million that Citizen’s Advice estimate ran out of credit last year.

Suppliers do have additional support credit for those of pensionable age, with a disability or long-term health condition so don’t be afraid to call and discuss it with them.

Even if you aren’t vulnerable, there are hardship funds.

Food Banks

The Trussell Trust, an anti-poverty charity, has 1,400 food banks in the UK in addition there are more than 1,172 independent ones. Major supermarkets also offer food parcels and don’t forget to check out the shelves with food that is coming close to its sell buy date. it’s usually drastically reduced in price and perfectly safe to eat.

Health and Wellbeing

Inevitably dealing with debt can harm your mental and physical health. Experts believe the stress of dealing with debt causes worse health issues than the debt itself which is another reason to try and find solutions to your financial situation sooner rather than later.

Talk to family and friends, there is no stigma to having debts. You will likely find they’ve experienced similar issues.

If you’ve got worries about debts and are desperate to make a fresh start in tackling your problems in 2024 then contact us at MoneyMagpie.com or go to communitymoneyadvice.com for help and information.

MoneyMagpie is not a licensed financial advisor. Information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.

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