Debt Spiral, yours or not?

As I sit here with the TV on, watching the adverts interspersed with an occasional programme, I am amazed at how the viewer is being bombarded with credit card applications, quick fix loans, and a variety of funeral plans.
Personally, I find it all quite worrying. After all, what happens when the 5h1t hits the fan and payments can’t be met.
I’ve written about debt before, see here and here for examples of my thoughts.

What’s triggered this post is the announcement that Equifax has been hacked (link) and millions of people’s personal data is at risk.

One of the ‘popular’ ads is getting your credit score checked before you apply for a loan or credit card, and what is required on your application? Personal data.
When Hubby and I were first married, we tried to obtain a credit card and Equifax along with Experian were the two main companies we contacted. It turned out that our address was blacklisted due to bad debt, and apart from Hubby and I, three other people were living in our one bedroom box of a house, at the same time as us.

Having officially declared we were the only occupants, that the house had been a repossession and we had purchased it directly from the building society therefore we had no idea who the other people were, the blacklisting was lifted and we were in the clear. Suddenly everyone and his mother’s uncle wanted us to sign up for their credit card.

Credit cards are terrific as a short-term fix for a cash flow problem. If you clear the full balance every month, no interest is applied. Once you know your card and statement dates, you can ‘extend’ your credit by a couple of weeks with a matter of timing.
However, it was mentioned on the news last week that customers were anxious about their borrowing following the fact that their credit card companies were increasing their limits without notification.
Yep, that happened to me with all 3 of mine. I got close to the maximum, so they just upped it by a couple of thousand pounds. I had no way of repaying what I already owed, let alone any more, and it soon got out of hand.

Today, we are a society that lives on credit, interest free or otherwise, be it for cars, holidays, furniture, or a hundred other things but hands up those of us who know exactly what we owe, where and to whom?
Hubby and I are in a luckier position than some as we have no debts or mortgage to worry about. However, on the other side of the coin, our income is fixed and thus any extra expenditure, such as a credit card or loan repayment is in doubt before we even start.
Our new house is costing us a little more than I had hoped, but as we have a fully fitted kitchen (including washing machine now), we have some leeway, though I will still have to work to our budget for the things we need.  We’ve been there before, and I am looking forward to haunting second-hand furniture places and charity shops again. The only thing we both insist on having new is a bed and mattress, the latter we will get first as we can put it on the floor!

But going back to credit cards and loans, some of the interest rates as horrendous, over 1000% in some instances. It really does make me wonder how people can afford the repayments.
Then planning ahead, we have Funeral Plans, paying for something in advance.
The cost of a funeral can be over £5,500. That’s a lot of money to find, especially at an emotional and stressful time.  For some you pay a monthly amount, for others you pay the full cost (at the time of taking out your policy) up front then pay an annual  ‘protection premium’ to cover any increase in cost.
Reading the very hurried small print before it disappears off the screen, monthly plans may not pay out for the first 12 or 24 months. None I have seen on TV have a surrender value, so if you change your mind and cancel your payments, you get nothing back.
However, for peace of mind, especially for those with young families, perhaps this is a form of credit that should be given consideration over the expense of a credit card.
Mind you, some people have their premiums charged to their credit card in the first place.

So, in light of the Equifax thing, check your debt and credit cards to ensure you haven’t suddenly got charges for things you didn’t buy or know nothing about.
Just a thought.

About pensitivity101

I am a retired number cruncher with a vivid imagination and wacky sense of humour which extends to short stories and poetry. I love to cook and am a bit of a dog whisperer as I get on better with them than people sometimes! We have recently lost our beloved dog Maggie who adopted us as a 7 week old pup in March 2005. We decided to have a photo put on canvas as we had for her predecessor Barney, and now have three pictures of our fur babies on the wall as we found a snapshot of my GSD so had hers done too. From 2014 to 2017 'Home' was a 41 foot narrow boat where we made strong friendships both on and off the water. We were close to nature enjoying swan and duck families for neighbours, and it was a fascinating chapter in our lives. We now reside in a small bungalow on the Lincolnshire coast where we have forged new friendships and interests.
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3 Responses to Debt Spiral, yours or not?

  1. fransiweinstein says:

    They wntice us to over-extend ourselves and then they re-possess your home or belongings when you can’t pay the debt. It’s immoral.

    • Sadly it’s the boom and bust scenario, and something has to give sooner or later. Being a retired financial number cruncher and someone who has never had a lot of spare money, even when I was working, this uncontrolled borrowing scares me.

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