Rarely has the subject of debt been more relevant. With so many people having been furloughed, debts are mounting for a lot of them – in fact, maybe you’re one of them. There’s also the added worry that a lot of people have about whether they’ll have a job when the lockdown restrictions are finally lifted.
Finding that you can’t cope financially can be absolutely devastating, especially if you’ve never found yourself in this position before. You may have prided yourself on managing to save money, ‘paying your way’ and probably providing ‘treats’ for your family and friends.
When you realise that things have to change it may be too late – you’re in too deep and things look bleak.
It’s hard to admit that we haven’t been able to manage things as well as we’d hoped but these are unusual times so cut yourself some slack. With the way things are, a greatly reduced income and the current financial climate, it’s easier than ever to get into debt and if you’ve been made redundant, this in itself can be devastating. The emotional impact of redundancy is often huge anyway, let alone the financial consequences, even if you’ve received some compensation.
A budget needs to be drawn up and this needs to be realistic – rent/mortgage, food and bills need to be paid before anything else. If you can take a mortgage holiday, great, although you may find that your monthly payments increase a bit once you’re able to start paying again. Maybe your landlord will reduce your rent during this difficult time, but that’s not certain.
If you have children you may have to explain that you can no longer pay for some of the things they used to have but try to be positive in the way you tell them – they will take their lead from you and if you can make it seem as if you’re all going to cope and be fine, it’s a good life-lesson. Where you are concerned, once you hopefully get back to work, it may mean that you can no longer go out for meals with friends or socialise in the same ways. They’ll already realise that things are tight right now and you can only go for a coffee for a while – they may be in the same situation anyway. They may want to help you but this can make it worse – try to put down some boundaries, say that you’re going to be fine and that a bit of budgeting won’t hurt you.
Regarding the practicalities of debts mounting up, the worst thing you can do is to ignore the problem and hope it will go away on its own – it will not. Here are some steps to deal with your debt right now:
- Make a list of how much you owe and whom you owe it to. Mortgage and rent payments are most important, to avoid eviction so tackle them first.
- Speak to your lenders – they may agree to you stopping payments for a couple of months if your problem is a temporary one or they could arrange an IVA (Individual Voluntary Arrangement iva.co.uk to pay off the debt at an affordable rate for you.
- Find out how else you can make money. Is there a skill you have that could help you with a second job from home in the evenings?
- Can other family members lend you money instead of a bank or finance company? If you are able to borrow from within your family it’s vital to make sure that you agree on a regular method of realistic repayments with an end date for both parties. If you don’t do this resentment can build up and spoil the relationship.
- Sell possessions to pay off debt. Online auction sites are a great way to make cash which can then be used to pay off your bills.
- Even during these difficult times, the Citizens Advice Bureau is still operating by phone, e.mail and online chats so it may be worth contacting them if you’re struggling.
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