I need to find that T-Shirt… you know, the T-Shirt I wore not that long ago. The one that says, “Been there, done that, wore the t-shirt”.
Yup. To me this statistic isn’t a shock, but it obviously is to the rest of the UK. The statistic released is that 20% of people in the UK owe money to their gas and electricity supplier. This research was supplied by Uswitch.
Electricity and Gas Debts Are a Problem
There’s essential debt and unessential debt. Credit cards and payday loans are not essential to pay. Yes you should pay them if you can, otherwise your credit file will be marked.
However, before paying your credit cards etc, pay
1. Your rent / mortgage – keep a roof over your head!
2. Council tax – Don’t get evicted by the council!
3. Food – Stay alive!
4. Gas and electricity – Stay warm… and alive!
If you can’t do these 4 things then the unsecured debt won’t matter – you’ll have bigger problems! Credit card companies, payday loan suppliers and debt collectors will threaten, but check if there is anything they can actually do to you. Usually there isn’t as long as you’re offering a fair payment monthly!
Does Debt Make Me A Bad Person?
Well, owing debt to anybody is evil and terrible and you will go straight to hell… Oh. No. That’s not right. Being in debt is frightening, worrying, will steal your sleep and destroy your appetite. Your relationships with the people you love will disintegrate before your eyes and you’ll wonder where “you” went.
However, it’s not the end of the world. It’s about being armed with the knowledge on how to deal with debt that will get you out the financial ‘pickle’ you find yourself in. Whether you live in the States, UK, Canada, France, Australia or Japan, the same principles apply.
The most important thing is that you pay what you can afford. Be brave enough to face debt. I “ostriched” for about 6 months before I realised the problems were too severe and sought help. My head was in the sand for months and then it suddenly hit me that this problem wasn’t going to solve itself. Waking up in the morning was torture and I couldn’t live like that.
I know why 20% of UK homes have energy supplier debt – it’s because other debts shout louder. The day after missing a credit card payment I’d receive 3 or 4 calls. When I missed my energy supplier they just sent me a nicely worded letter. Which one would you pay? I bet it’s not the one you should pay!
What Would William Wallace Say?
I never knew William Wallace, obviously, but being Scottish, and having watched Braveheart recently I thought I’d give it a shot. The image below is a little “tongue in cheek” but it has a serious message. The worst case scenario in debt is bankruptcy. What does that mean?
Well, if you have any equity in assets you would lose these assets. Not good, but they are just possessions. If you have more equity than debt then you don’t need to go bankrupt!
If you do have to go bankrupt then it’s a 6 year penalty on your credit file. A default is added so obtaining credit is harder, but bankruptcy only lasts for 1 year. You won’t go to jail, you won’t have to sell your kids, you won’t be tortured and in truth, barely anybody knows about it.
Be careful, bankruptcy is not a solution to enter lightly and advice from a charity should be sought first, however it’s not the end of the world. I knew a man who went bankrupt, came back afterwards and started his own business which is now worth over £6 million.
Bankruptcy won’t stop good things from happening, only the person with the debt problem can do that.
Caveat: William Wallace probably didn’t say “They may make us bankrupt, But they’ll never take our freedom”… it’s done for purely comedy effect. Obviously.