Today, we are interviewing Sara Williams. She writes on Debt Camel about how to get out of debt. If you are struggling and want to have more info about your situation, her insightful and educational website is what you should refer to. Even in the worst cases, there is always a solution, never give up!
Hi Sara, thanks for joining us, I’d like to ask you this first question about Debt Camel. What inspired you to start it and why you want to help other people with their debt?
I am a debt advisor at Citizens Advice, I started Debt Camel because I wanted to provide sensible information on debts without the jargon that people could access over the internet whenever they have a question. Too many people wait too long before taking debt advice, you should be able to find information in your own home before you have a crisis.
What’s the best financial tip you have ever given someone?
A tip sounds like what you give someone for the 3 o’clock at Newmarket… debt advice means you have to know a bit about someone’s situation before offering advice. But I guess “Know the difference between wanting something and needing it” applies to most people!
What’s the first cause of debt? In particular, is there anything like good and bad debt?
Sometimes someone just overspent, but much more often it happens because of some external event – business failure, redundancy, erratic income, separating from your partner, illness etc.
Mortgage is usually a good debt because you will have the house long after you repaid the mortgage. Putting a pair or shoes or a holiday on a credit card where you only pay the minimum each month is bad debt – you will still be paying for it in 10, 15 or 20 years, long after the holiday is forgotten and the shoes have been thrown away.
What’s the worst type of loan?
Any debt you can’t afford… but secured debt is the worst because it’s much harder to resolve any problems. So a secured loan on your house, a logbook loan, a guarantor loan or the rip-off “rent to buy” stores such as Brighthouse. Avoid all of them!
Would you ever advise a debt consolidation loan? The idea of taking a loan on top of another drives me crazy, but this can also be a good thing. What’s the typical scenario?
It’s rare. For every one person that can make a consolidation loan work, there are too many others who just go onto run up more debt on the cards they have cleared. Nobody thinks this is going to happen to them… most of them are wrong 🙁
How often should we check our credit score? Would you recommend a specific agency?
That’s very situation dependent. It’s easy to get too obsessed with credit scores, but I suggest you check at least 6 months before applying for a mortgage to make sure there is nothing unexpected there – problems can take time to sort out. I’ve compared all the ways to check your credit records: you can now get your credit score for free from all three credit reference agencies. None of them are “better” than the others, they just have slightly different information.
What personal finance tools do you currently use to track and manage your money?
I like a lot of the new apps such as Money Dashboard and Chip. Open Banking is going to be a huge step forward helping people manage their money. This sort of app is the antidote to losing control of your money with contactless payments – they make it easier to track your spending and save money painlessly.
As a mum, how did you teach your children financial skills?
When they were toddlers they played games like running a cafe with toy food. I would pay with real pennies – get the kids used to hearing “That’s too expensive, it’s not worth that much” and “It looks very nice but i only have 4p so i can’t afford it.” After that they progressed to board games – my son always used to win at Monopoly!
How often do you check your finances?
A quick check a couple of times a week, credit card statements when they arrive, then a more in depth look once every couple of months. Insurances get compared when renewal letters arrive. MoneySavingExpert’s Energy Club tells me when I can save by switching my gas and electric supplier.
If you want to know more about Sara and Debt Camel, just head over her website.