Which description best suits you (if you have debt of course)
"I
never asked them to increase the card limit"
"the letter said I was one phone call away from £5,000"
"I
was never any good at looking after money"
"I
never had money problems before I started using credit"
"I
was going to pay it all off when I got…"
"I
never had credit before meeting my husband (or wife)"
Any
of those sound familiar? Very few people intend to get into debt,
but most of us do intend to use credit. Maybe if the lender asked
the question "are you any good at paying back credit?" there would
be many less debt problems: if there were such a question, would we
answer it truthfully? I doubt it.
on Debt Management and
Bankruptcy
Our advisors will be happy to
give you free debt advice about how you can manage your
debts
There are many reasons why credit can turn to debt, and
of course not all are preventable. The following three
examples will give you an insight into preventable debt.
1. Lack of Value
Most of us that use credit are susceptible to the ‘why
should I payback’ thinking; it goes something like this:
You buy a new computer on 36 months credit
Notable events
Feel good about payback
Purchase Day - 1
You do not have a computer
105%
Purchase Day
Latest specification computer
100%
+ 6 months
Specification still good
75%
+ 12 months
Specification superseded
50%
+ 18 months
Latest software no use on your PC
25%
+ 24 months
Needs repair out of warranty
What figure would you enter?
It is obviously nothing to do with the computer
manufacturer that you feel no benefit in continued
payment, but the computer’s relevance is a strong focus.
With a £100,000 mortgage for your ‘dream house’ you are
unlikely to feel that same resentment when meeting those
payments. It is quite easy to start missing the odd
payment ‘to treat yourself’ or to use the money to pay
for something you value more. Using our chart above,
what would happen if your new car was stolen, with a lot
of damage and the insurers would not write off the car.
You then had to put up with a car that had 75% repairs
and in a far from new condition?
