This section of the website is focused on debt, it covers:
•What debt is
•How you can get into debt
•Help, which is available if you're in debt
Get started below.
DEBT IS SERIOUS, it can make life even harder and once you’re in debt it can be really hard to sort your finances out and pay the debt back.
Problems with debt can lead to problems getting CREDIT in the future, CREDIT is simply the name given to you being able to borrow money.
It can be hard when you are younger to think about what might happen in the future but not being able to get credit can cause serious problems, if you want or need to buy a car in the future or want to buy a house you’re probably going to need Credit to do it.
How do you make Decisions about Borrowing Money?
Every time you borrow money or don’t pay a bill on time, it goes on something called your CREDIT SCORE. This is basically a file that is kept on you that records all your financial transactions, banks and loan companies will look at the file if you ask to borrow money.
If you have a bad credit score when you need to borrow money it will be more expensive and if it’s really bad they wont let you borrow any money at all.
If debt spirals out of control it can lead to serious legal consequences like having to go to court and getting something called a CCJ (County Court Judgement) against you, this basically means you haven’t paid a debt back. These can make it harder to get credit in the future when you really need it.
What can put you into Debt?
Lots of things, and you might not even realise that some of them are effectively a debt. Some of the things, which can put you in debt include:
MOBILE PHONE CONTRACTS – (These are a finance contract and they are debt, they have lent you the money for the handset basically)
BILLS – You can get in debt if you don't pay bills like Water, Electricity, Phone Line, Broadband on time. You can learn more about bills by visiting the bills page on this site.
LOANS - (Banks and other providers like ‘Pay Day Loans’ – Link to more info)
STUDENT LOAN / TUITION FEES – (If you go to University you will have to borrow money to do this)
RENT - (If you fall behind with your rent)
CREDIT FOR ITEMS – (Companies like Klarna which allows you to pay for items bought on websites in instalments)
STORE CARDS – (Basically credit cards you can only use in certain shops)
CREDIT CARDS – These are loans but the money you borrow has a much higher interest rate than a loan this means you can end up paying back a lot more than you borrowed.
COUNCIL TAX – You may have to pay this to your local council, it covers things like rubbish collection that happen locally, not paying it can put you in debt.
BENEFITS – Yes, you can even get in debt when you claim benefits through something called ‘Overpayment’, you can learn more about benefits by visiting the benefits page on this site.
Click on the links above to learn more about them now, they are also covered on the website in other places.
Some of the things above are more obvious than others. It’s easy to see how a credit card can get us in debt but some of the others are harder to spot, like the fact we can get in debt when we are claiming benefits.
We also know that sometimes the things listed above can’t be avoided like if we need a new mobile phone.
You should make sure you really think about it before you take on something like a mobile phone contract. It can be useful to ask the following questions:
CAN I AFFORD IT? – Do I really have enough money to cover it every month?
DO I REALLY NEED IT? – For example: Do you really need a new phone? Is your phone okay really and it’s just the latest one you want? Is it really worth getting into a three-year contract for it?
LET'S RECAP ON WHAT WE HAVE COVERED
DEBT IS SERIOUS – It can have a lasting impact and while you may not think that impact is important now, it can be in the future
LOTS OF THINGS CAN PUT YOU IN DEBT – It’s not just things like credit cards which can put you in debt, lots of things we may need can cause us to get in debt, if you're in doubt, get advice
ASK YOURSELF IF YOU CAN REALLY AFFORD IT – With all your other outgoings and what you have to pay for can you really afford something else?
DO YOU NEED IT? – Do you really need to get in debt? Or can you make do?