To get out of debt without more loans is possible, if you know where to look. You don’t need to go to a debt consolidation company to get out of debt, there are plenty of free charities below to help you. Of course, the main issue is to ask why you got into debt, in the first place. Often it is due to events beyond people’s control (being widowed or divorced, someone being dishonest, mortgage arrears, losing a job, illness etc). But often it’s because of our modern consumerist culture of ‘buy now, pay later’. Even the man who invented the credit card, now says he wishes he hadn’t. Also see creating a kinder benefits system.
First Things First
- Have a cup of tea (or something stronger if need be) and gather all your debts together, to find out how much you owe, and to who. Most companies will let you pay a little back each month, as it’s more expensive to take you to court. Bailiffs have limited powers (they can only usually take ‘luxury items’ like TVs or games consoles) and are not allowed to take pets). Write, call or email every creditor, to try to sort something out that is affordable. If you can find a second part-time job, great (but in this climate it’s unlikely). You could downsize. But presuming you have done all the common sense things:
- The Ultimate Guide to Frugal Living is a book to help you break the spending habit and free yourself from financial fear – save money, plan ahead, pay off your mortgage and retire early. This book contains hundreds of ideas to redefine necessities, set goals, make homemade food, and save money on technology. A life of frugality can make life more relaxing too.
- Switch over to your local credit union. Most will let you switch if in debt and you often get better rates, if you are paying interest.
- A few years back, many people were put in higher council tax bands, and overcharged. Most councils have since remedied this. But it’s still worth checking at Which? in case you are entitled to back-pay.
- Claim your benefits. Millions go unclaimed yearly, mostly from disabled, registered blind, older people or carers. Be sure to ask for back-dated money as it’s not always given automatically (in some cases, this could amount to several hundred pounds).
Find a Debt Charity to Help
These are all genuine charities, who won’t charge a penny (they are funded either by donations or the credit industry). They don’t judge (they have heard it all before) so give them a call. You will feel much better, and can often set up interest-free payments, for them to take over for you. Once they are involved, it’s usually illegal to get hassled by your creditors direct.
- Citizens Advice gives good advice, but it’s mostly in person and due to demand, you often have a long wait.
- Stepchange is a major debt charity, funded by the credit industry. Take their free online 20-minute test then give them a call (free) to get help. They can in many cases set up a free debt consolidation plan that pays back money in one affordable payment at no interest. It can also help with bankruptcy and give free advice for equity release.
- Christians against Poverty will help anyone of any faith or none. Their experts can help set up a CAP Account for you to save and pay off debt at the same time. It also runs free money courses in churches (promoting cash spending, which spends 33% less).
- Payplan is a financial company that uses some profits to offer free help for those in debt. It has expertise in mortgage arrears.
- Debt Support Trust & Debt Advice Foundation are two reputable charities that give help (be careful as many ‘loan shark’ companies all have similar names (debt help, debt advice etc). As long as your computer doesn’t have a virus, these two charities are the real deal!
- National Debtline & Business Debtline (for self-employed) are two national phone helplines, where experts can help you with issues.
- Farming Community Network is a network of help by phone run by different charities, who between them can offer help for finances, tenancies etc.
- Many towns (and especially cities) have their own charities that help with people in debt. Debt Free London is one example.
- Grocery Aid offers financial one-off grants and other help for people who work in the grocery industry, both retail and wholesale. This includes those who give unpaid care to others in their household.
Books to Help You Get Out Of Debt
- The No Spend Year is the story of how financial journalist Michelle and her husband spent a year only buying essentials, to help pay off their huge London mortgage. They found creative ways to live a social life, and travelled for free.
- Financial Recovery is a book by Karen McCall, who used to live in a posh apartment, drive a fast car and wear designer clothes. In reality, she was heavily in debt, and had a special bowl on top of the fridge, to hide her bills. She got out of debt by looking inside (emotions on why she spent over her budget).
- The Barefoot Investor is one of Australia’s best-selling books. Author Scott Pape is a financial professional who has devised a way to sort out your budget and finances in 10 minutes a week.
- Meet the Frugalwoods is the story of a young professional couple who spent a few years saving all their earnings, to now live their dream rural life in the US. Their blog details monthly expenses (one thing they never skimped on was preventive vet care for their beloved dog (a nice yet sad post on what she taught them about simple living).
- The Buy Nothing, Get Everything Plan takes you through a 7-step plan to save money, and save the planet. Friends Liesl and Rebecca wanted to do something to stop the plastic waste on their beaches, so now teach others how to buy less, give more and live simply. Includes a list of 50 items you never need to buy (Ziploc bags & paper towels) and 50 things to make instead (gift cards & salad dressing!)
- The Year of Less is the story of Cait Flanders who was mired in debt and very unhappy. So she decided over 2 years, to only buy what she needed (if this included a new winter coat, fine). But out went non-essentials like new shoes ((which didn’t matter, as Cait doesn’t like buying shoes). She got out of debt, and was happier too.
Debt (not poverty) is the greatest enemy of financial well-being and peace of mind. There are massive forces arrayed in the world to tell you of the great benefits of debt. They dress debt in a suit, and call it credit. But it all comes down to the same thing. You have mortgaged your future, to pay for your present. And this is something you don’t ever want to do. Kent Nerburn