Tips for when you are Running Low on Cash

Towards the end of each month when you are waiting for your wages to come through or the student loan to be processed you can find yourself running low on cash. There are some ways to survive; below are a few tips for getting through this:

• Get your cash-back from everyone who owes you
• Calculate how much you really have
• Make a mini budget and stick to it
• Use only cash for the next few days – don’t use credit cards. Lock up your cards until you have some money
• Keep an eye out when you are walking. There is often money to be found on the streets, it may not be much but it all adds up. Supermarket trolleys which require £1 to use will sometimes have the coins left in – keep your eyes peeled.
• Pay off your essentials first – if you have rent to pay, pay it
• Stick to using only your free minutes and texts
• In terms of food, focus on keeping your stomach full rather than a healthy eating regime. Read the frugal living websites and the food section for some advice
• Don’t start thinking just because you are in a little bit of debt, it’s okay to get into some more
• Beg friends (and family) to feed you
• Count down the hours till the money comes through

How to tell if your debt is getting serious

Signs that your debt is getting more serious can be identified when you can sympathise with the following:

• You are too scared to work out how much you actually owe
• You avoid opening bank statements
• You can barely manage to repay the credit card minimum repayment amount
• You have started to charge everyday items to your credit card
• You are taking out loans and credit agreements to pay for other debts
• Your debt is starting to affect your mental health and you feel unable to cope
• You get angry letters from your creditors

You need to admit you have a problem before you can sort out your current situation.

Sorting out Different Debts

Do not ignore debt or any incoming bank and bill statements – they don’t go away

• Set yourself realistic goals – see your debt and finance as lots of smaller distinct issues rather than one big problem. It will ensure you don’t panic and can deal with each issue in turn.
• Find a debt management system that works for you. Some consumers will love using excel and spreadsheets, and some will prefer to use old fashioned files.
• Do not be tempted to borrow more money to pay off the existing debts. Instead seek help and follow the information below on how to differentiate your debts . Seek assistance from your university, from the Citizens Advice Bureau or from specialist money advice organisations who can help you for free, such as the Consumer Credit Counselling Service or The National Debtline.
• Some debts are more serious than others. This is not due to the size of the debt, but the consequence of being unable to pay this debt. Non-payment of certain debts can lead to legal consequences such as court action, loss of your flat or the loss of essential services (e.g. your fuel supply). Below is a summary of the different types of debt.

There are different ways in which the debt can be broken down –

1. Priority debts
2. Educational debts
3. Non-priority debts

Priority debts are those debts which have the most serious consequences, sanctions and repercussions if they become unpaid, such as:

• Rent/Mortgage
• Gas/Electricity/Water Bills
• Council Tax

Educational debts can vary in their prioritisation depending on your circumstance:

• Student Loan
• Graduate endowment fees
• Library fines

The consequences of non-priority debts are less stringent due to the lack of legal mechanisms which organisations can implement:

• Credit/Store Cards
• Bank Loans/Overdrafts
• Loans from Family/Friends

Asking Creditors for Help

Companies are, in general, sympathetic towards customers who admit they are struggling with debt. Bad debt is costly to a company and they would rather help you than let you ignore the problem, causing both parties future problems.

Step Five: Send a copy of this financial statement to each of your creditors. Detail the circumstances and reasons for non-payment. Ask for the interest on the account to be frozen and the charges to be stopped, and return the card cut up as a gesture of goodwill as evidence of how you plan to stop adding to your existing debt. Ideally the creditors will accept this agreement for a period of time, perhaps six months, allowing you to reduce your outgoings in other areas. If your offers are not accepted contact your Citizens Advice Bureau and student financial advisor for more help. For more help the following websites may also be able to assist you: cccs.co.uk , nationaldebtline.co.uk and m-a-a.org.uk .

Out of Control Debt

Trust Deeds and IVAs

If you are still struggling to keep up repayments on credit cards and bills, a Trust Deed (in Scotland) or Individual Voluntary Agreement (in England) may be the answer. These are legally binding arrangements with the companies you owe money to. You make a monthly repayment, based on your income and expenditure. It is very similar to asking creditors to reduce payments but is done in a legal manner over a set period of time. Once this time has passed the debt will be written off.

In Scotland the legislation currently allows Trust Deeds to be discharged in three years, whereas in England this period is five years. The insolvency company which looks after your case will become in charge of all your financial assets, but protection is not guaranteed. You will only become protected if certain conditions are met and your creditors have agreed to the Trust Deed or IVA. In both cases your debts must have been significant to begin with – usually more than £10,000. Contact carringtondean.co.uk for more help and advice on this topic.

Bankruptcy

This isn’t something young people should be considering. It could affect job opportunities as some employers, especially financial companies, require information about your financial resources and verification that you have never been declared bankrupt. It currently takes three years in Scotland to be discharged from a bankruptcy agreement, whereas it is only one year in England.
Declaring yourself bankrupt will cancel all your debts but not your student loan. However, there are repercussions in terms of your entitlement to take out future loans, credit and a mortgage, which can last long after the initial bankruptcy period has ended.

Blacklisting

If you are unable to get credit facilities, or even a student bank account, you may have become 'blacklisted'. This happens when you have failed to make minimum repayments on your credit cards. The company may have contacted a credit reference agency which holds a profile about the kind of credit user you are.

Find out more by visiting experian.com and equifax.co.uk