Managing your Money for web2 by shuifanglj


									 2          SATURDAY APRIL 30 2011
                                                                                                                                                                          MONEY MANAGEMENT...

Managing your finances
in challenging times...
          ieron Brennan, CEO             shed year for the population, coping       aging you to look at your finances     A budget is important
          of the Irish League            with pay cuts and redundancies on a        honestly it will help you highlight    because it will show you:
                                         scale not seen in many of our              where your money is going and start
          of Credit Unions,                                                                                                • How much money is coming into
                                         lifetimes.                                 you on the first steps of budgeting
          outlines why                   There are of course other factors that     and managing your money more             your household.
managing your money is now               can contribute to financial difficulties   effectively.
more important than ever.                such as illness, relationship break-       We need to change our view of and      • How much money is going out.
                                         down, an unexpected expense such           relationship with money.
2011 is set to be the year that deliv-   as a fire, death or robbery.               Budgeting is the key. While most of    • How much is available to pay to
ers Northern Irish families and indi-    However, this new financial year           us find budgeting boring, it is          those you owe money to.
viduals some of their toughest           need not mean unnecessary stress           absolutely essential - a budget is a
financial challenges. It doesn’t bear    and debt. Whatever your circum-            plan of money you expect to receive    • How you can best plan your                                      Kieron Brennan, CEO of the
repeating that 2010 was a water-         stances are, we hope that by encour-       and how you expect to spend it.          spending in the future.                                          Irish League of Credit Unions

  Pages 2-3

                                                                                                                                                        The Credit
                                                                                                                                                        Union’s top
                                                                                                                                                        tips for
  Page 4
                                                                                                                                                        your money
                                                                                                                                                       Keep track of your
                                                                                                                                                       spending. Keep your
                                                                                                                                                       receipts or take note of
                                                                                                                                                       what you spend your
                                                                                                                                                       money on. It will help
                                                                                                                                                       you understand where
                                                                                                                                                       your money is going and it
  SMART SHOPPING HABITS                                                                                                                                might just be an eye
  Page 6                                                                                                                                               opener.

                                                                                                                                                       Estimate your income and expenditure for a set period and
                                                                                                                                                       budget accordingly.
                                                                                                                                                       But be realistic and don’t underestimate!

                                                                                                                                                       Get into the habit of saving. Try to save at least five per cent
                                                                                                                                                       of your regular income for emergencies.
                                                                                                                                                       Be prudent. Shop around and get the best deals and look at
  DEALING WITH DEBT                                                                                                                                    cost comparison websites.
  Page 7
                                                                                                                                                       Borrow wisely
                                                                                                                                                       There are times in our lives when we run short of funds.
                                                                                                                                                       If you have to take out a loan, be sure you only borrow what
                                                                                                                                                       you can comfortably afford to repay. You should match the
                                                                                                                                                       repayment term to the purpose of the loan - don’t make
                                                                                                                                                       the mistake of paying off Christmas over a number of years.
                                                                                                                                                       Our best advice is to stay away from credit cards and not to
                                                                                                                                                       use money lenders.
                                                                                                                                                                     SATURDAY APRIL 30 2011                    3

Get a money makeover
                                                                                                                                                                                  tips for
Do you need a money makeover? Here’s some advice from the Consumer Council                                                                                                        extra
for Northern Ireland to make your money go further:
• Use a budget plan to work out              complained about faulty goods and                                                                                     If your outgoings are more than your in-
  what money’s coming in, what’s             shoddy service.                                                                                                       comings and you need some extra
  going out and where you can make                                                                                                                                 cash, there are lots of ways of getting
  savings.                                 • Sitting on a small fortune? There is                                                                                  your hands on some!
                                             £12 million in forgotten bank ac-
• Start the savings habit - even put-        counts and building society ac-
                                                                                                                                                                   Funded by the Department of Enterprise Trade
  ting a little bit aside can make a         counts here and £6 million in
                                                                                                                                                                   and Investment, Advice4DebtNI offer free guid-
  real difference, so start planning for     Ulster Savings Certificates.
                                                                                                                                                                   ance on all financial matters, from saving to
                                                                                                                                                                   debt management.
                                           • Don’t bury your head in the sand -
                                                                                                                                                                   Here are some of their tips for boosting your
• Shop around – you could save                If you’re worried about money or
                                                                                                                                                                   income levels:
  money by shopping around for the            struggling to make ends meet,
  best deals on current and savings           don’t keep it to yourself - get help
                                                                                                                                                                   1 Ask your employer about Childcare Vouch-
  accounts, mortgages, insurance,             early.
                                                                                                                                                                     ers. This scheme enables you to pay for
  credit and store cards.                  For more information on the
                                                                                                                                                                     childcare from pre-tax income and could
                                           Consumer Council for Northern
                                                                                                                                                                     save you up to £700 per year.
• Make your voice heard – we could         Ireland visit
  all have over £219 a year if we
                                                                                                                                                                   2 Check your benefit entitlement. Perhaps you
                                                                                                                                                                     could get some tax credits or help with your
                                                                                                                                                                     rates. An online benefits calculator can be
                                                                                                                                                                     found online at

       How healthy are your finances?

                                                                                                                                                                   3 Could you get more hours at work or maybe
                                                                                                                                                                     a higher paid job?
       In March this year Northern Ire-                     vice per population while Northern Ireland had     It’s all about being prepared. Research carried
                                                                                                                                                                   4 Are you entitled to Child Maintenance? Con-
                                                            the highest levels of bankruptcy and individual    out for the Northern Ireland Consumer Council
       land was identified as one of the                    voluntary arrangement (IVA) recommendations.       shows that many Northern Ireland consumers            tact the Child Maintenance & Enforcement
       UK's personal debt hotspots in a                     One of the problems experienced by Northern        are not as financially ‘savvy’ as the rest of the     Division on 0845 608 0022.
                                                            Ireland clients of the charity’s advice service    UK.
       report by the Consumer Credit                        was that they did not have enough income to        Their research found that many consumers            5 Sell anything you don’t need at local car
       Counselling Service (CCCS).                          cover their living expenses. The charity said      here did not hold any insurance to cover loss of      boot sales, Ebay, Amazon, Gumtree or the
                                                            that falling into debt is not necessarily caused   income or property and more than a quarter of         free ad newspapers. They are also good for
       The charity said it dealt with more bankruptcy       by living beyond one’s means, but can be a re-     people said they did not use any information at       picking up bargains!
       cases in Northern Ireland than anywhere else         sult of a change in circumstances such as re-      all prior to choosing a financial product such as
       in the UK. The report found many people are          dundancy or life changes like having a baby or     opening a bank account, taking out a loan or        6 Recycle old mobile phones or sell broken
       unable to meet their monthly outgoings and           falling ill.                                       getting a mortgage.                                   gold jewellery for cash – check the cash
       are at risk of falling into further debt.            While some circumstances are beyond our            Their research also showed that one in five           back websites for an even bigger income
       According to CCCS statistics for 2010, London        control, there are some measures we can take       people felt it was not important at all to keep       boost!
       had the highest levels of demand for debt ad-        to manage our money before problems arise.         up to date with financial matters.
                                                                                                                                                                   7 Have you forgotten about a bank account
                                                                                                                                                                     you had from your childhood or perhaps

       Falling into debt is
                                                                                                                                                                     your parents set up an account for you that
                                                                                                                                                                     you didn’t even know existed? It’s simple to
                                                                                                                                                                     check if you have any and get your money
       not necessarily                                                                                                                                               back. You don’t even have to know where
                                                                                                                                                                     the account was held. To check for accounts

       caused by living                                                                                                                                              held with a bank or building society visit
                                                                                                                                                           , or contact the
                                                                                                                                                                     Consumer Council on 0800 121 6022 who
       beyond one’s                                                                                                                                                  can assist you.

       means, but can be a                                                                                                                                         8 If you think you’ve been mis-sold payment
                                                                                                                                                                     protection insurance it’s worth raising a for-
                                                                                                                                                                     mal complaint. There are many companies
       result of a change in                                                                                                                                         that offer to do this but charge large up front
                                                                                                                                                                     fees. You can easily reclaim your premiums

       circumstances such                                                                                                                                            yourself if you are willing to put in some
                                                                                                                                                                     time. Simply write a formal complaint to the
                                                                                                                                                                     company outlining the grounds that you be-
       as redundancy or                                                                                                                                              lieve constitutes mis-selling.

       life changes.                                                                                                                                               9 The Martin Lewis website www.mon-
                                                                                                                                                            has a guide to reclaim-
                                                                                                                                                                     ing payment protect insurance and template
                                                                                                                                                                     letters which are useful. If the company re-
                                                                                                                                                                     jects your claim then you can approach the
                                                                                                                                                                     Financial Ombudsman Service.

                                                                                                                                                                   For more details on the services offered by Ad-
                                                                                                                                                                   vice4DebtNI, contact 0800 917 4607 or visit
4    SATURDAY APRIL 30 2011
                                                                                                                                                                                   PLANNING A BUDGET...

 Planning your budget                                                                          Your own budget...
    A budget is a spending plan that takes into account                                         Add up the total in each
    your monthly income and expenditure, so that you                                            section (A to E) and this will
    have a clear idea of where your cash goes.                                                  be your total outgoings.
                                                                                                Add up the total in the in-
    If you have a financial goal, like clearing debt or saving up for a deposit                 come section.
    on your first home, a budget plan will help you work towards this.
    The independent consumer rights organisation Which? offers a step-by-                       TOTAL IN minus
    step guide to budgeting effectively:
                                                                                                TOTAL OUT
    Get organised and take your time
    Set aside at least an hour before you begin trying to draw up your budget,                  = FINAL TOTAL.
    as doing it in a rush is likely to mean you make mistakes. Also, it makes
    sense to gather together all the paperwork you’ll need before getting
    started, including a few months’ worth of bank statements, copies of your
    recent bills and details of your savings and pension contributions.

    Add up your income
    Next, you need to calculate your income. Make a list of your regular earn-
    ings from employment (after tax and National Insurance has been de-
    ducted), as well as any income you have from savings, investments,
    self-employment or the rental of any properties you own.
                                                                                                   HOME                                     TRAVEL                                     OTHER
                                                                                                   Rent or mortgage                         Children’s fares                           Cigarettes/Alcohol

    Work out how much you’re spending
    When calculating your monthly spending, look at your bank statements,                          Building insurance                       Adults’ fares                              Meals/drinks out
    household bills and credit card bills to ensure you have a realistic idea of                   Contents insurance                       Visits to relatives or friends             Subscriptions
    where your cash is going – and avoid guessing wherever possible.                               Gas                                      Car tax                                    Newspapers/magazines
    Remember to take into account occasional spending, not just monthly ex-                        Electricity                              Car insurance                              Holidays
    penditures. Think about the cost of Christmas, birthdays, and your annual                      Water                                    Petrol                                     Savings
    holiday.                                                                                       Telephone                                Car servicing                              Life insurance
                                                                                                   TV licence                               Other                                      Child/spouse maintenance
    Compare what’s coming in and going out                                                         Repairs/renewals                         TOTAL C                                    University/college fees

4   If you find you have more money coming in than going out, it’s still a good
    idea to draw up a budget plan. This will allow you to ensure you keep
    spending sensibly, and could help you find extra opportunities to save for
                                                                                                   TOTAL A
                                                                                                                                                                                       Birthday presents
                                                                                                                                                                                       Christmas presents
                                                                                                                                                                                       Other expenses
    the future or pay off debts more quickly.                                                      FOOD AND CLOTHES                         Credit card 1                              TOTAL E
    On the other hand, if you discover you’re spending more than you earn at                       Food and groceries                       Credit card 2
    the moment, making a budget is a crucial task you shouldn’t put off. If                        School lunches                           Store card                                 Money coming in
    your expenditure regularly exceeds your income, you’ll drift into debt – and                   Work lunches                             Bank charges                               INCOME
    if you don’t address the situation, you could find yourself in a downward fi-                  School uniforms                          Pension contribution                       Wages/salary/pension
    nancial spiral which is difficult to escape.                                                   Children’s shoes                         Loan repayments                            Benefits
                                                                                                   Clothes/shoes for self                   Other                                      Maintenance

    Draw up a budget you can stick to                                                              Clothes/shoes for partner                TOTAL D                                    Contributions from other people
    Be as realistic as possible when planning your budget. Small changes                           Casual clothes for children                                                         in the household
    such as not buying a takeaway coffee every day could make a big differ-                        Other                                                                               Student loan
    ence to your budget over the long-term. Meanwhile, changes to your                             TOTAL B                                                                             Other
    lifestyle that you’ll barely notice - like switching your current account,
    credit card provider or energy deal - could help to balance your budget
    without the need for cut-backs.
                                                                                                                                           For more budgeting and money saving tips, visit

Start the savings habit early                                                                                                                Saving tips...
                                                                                  It’s amazing how much of our spending or                   Lead by example                             Encourage goal-setting
                                                                                  saving behaviour is learned from our                       Children are very receptive to what         If your child wants an expensive toy,
                                                                                  parents.                                                   they see and hear. Keep your own            encourage them to save towards it.
                                                                                  Whether you grew up in a household where it was            piggy bank and let the younger chil-        Use a graph or diagram (a ther-
                                                                                  normal to save every penny or you were encouraged          dren see you putting your spare             mometer shape is ideal) they can
                                                                                  to splash the cash, you may want to change your            change in it. Bring older children with     colour in as they save towards the
                                                                                  habits and set a good example for your own children.       you if you’re going to the bank or          final amount.
                                                                                  To avoid your children picking up bad habits from          credit union and explain to them
                                                                                  you, or to help them understand if you’re having fi-       you’re putting money in your savings        Put up a picture
                                                                                  nancial difficulties, communication is key.                account.                                    Adults will often keep a picture from a
                                                                                  Advice4debtNI offers free confidential independent                                                     magazine of something they really
                                                                                  debt and money advice to individuals in Northern Ire-      Open a savings account                      want - let your kids do the same!
                                                                                  land.                                                      Most banks have special children’s          Hang a picture of the wanted item on
                                                                                                                                             savings accounts and provide mem-           the wall and this will help your child
                                                                                  Its advisors suggest being honest and explaining your
                                                                                                                                             bership packs including piggy banks         concentrate on saving even harder.
                                                                                  situation to your children is the best option:
                                                                                                                                             and savings books. Family members
                                      There are lots of tools on the internet     “Let them know what they can and can’t have. If they
                                                                                                                                             can add to the account if your child        Don’t overdo it
                                      to help you create and manage a             are old enough show them your budget so that they
                                                                                                                                             needs a bit more encouragement!             Children may get so focused on sav-
                                      budget. These websites have excel-          understand why you are saying no.”
                                                                                                                                                                                         ing their money, that they become re-
                                      lent resources for drawing up a             Advisors at Advice4debtNI recommend setting pocket
                                      budget plan:                                                                                           Match savings                               luctant to spend any of it! Encourage
                                                                                  money at a level you can afford as well as educating       For every pound your child saves,           healthy spending habits by inviting
                                                                                  your children to manage their own money well.              offer to put in a matching contribu-        them to spend a small amount on a
                                      (from the Money Saving Expert website)
                                                                                  It’s also suggested that adult children can contribute     tion. Either match it pound for pound       treat, or even better, surprise them
                                             to the household expenses.                                 or as a percentage. This will encour-       with something you’ve bought for
                                            Here are some more tips on teaching children about         age them to keep saving.                    them.
                                        healthy financial habits:
 6          SATURDAY APRIL 30 2011
                                                                                                                                                                             SMART SHOPPING HABITS...

   Stretch your shopping budget...
    Ready to go shopping? If you are serious about saving money when stocking up your
    cupboards, here are some handy hints to help you stay on track.
   • Before you go shopping, check your              you regularly shop online, supermar-           • If you spot a great bargain on foods
     fridge, freezer and cupboards so you            kets will store your favourites so you           with a limited shelf life, how about
     know what you already have.                     can simply repeat your order.                    buying in bulk and filling up your
   • Plan your meals for the week, then           • What about growing your own fruit and
     write a list.                                  vegetables? You'll save a fortune and          • Buying in bulk can sometimes save
                                                    will be happier and healthier - think of         you money - buy large packets of
   • If you’re serious about sticking to a          all that time spent out in the fresh air!        items like washing powder you use
     budget, take cash only and leave the                                                            fairly often.
     debit and credit cards at home.              • Check press advertisements for up-
                                                    coming special offers and sales. Keep          • Check the 'Buy One Get one Free' of-
   • Although supermarket shopping is               coupons and vouchers for extra sav-              fers carefully when shopping. There's a
     convenient, it's not always the cheap-         ings. And don't just throw the flyers            fine line between getting a bargain
     est. Check our your local butcher and          from supermarkets straight in the bin -          and buying too much of something
     greengrocer to see what bargains you           you never know what bargains you                 you don't actually need.
     can pick up.                                   might miss!
                                                                                                   • Don't go shopping for food when you're
   • Consider shopping online and having          • Don't automatically go for items at the          tired, hungry or stressed. You'll end up
     your groceries delivered. You're less          end of an aisle in the supermarket or            laden down with overpriced items you
     likely to buy things you don't need if         good at eye level - these are often              don't really need and may well have
     you don't see them on a shelf! When            more expensive.                                  abandoned your shopping list.

Saving money with the best insurance deals                                                                                                                                                  Shop smart
Renewing your car insurance? What about home insurance and illness cover? There are lots of                                                                                                 with vouchers
questions when it comes to insurance and thankfully the Money Advice Service is here to help.                                                                                               Leading online codes and
The government-backed service offers          cantly over the last year and you may be        bly be covered by your contents or motor                                                      money saving vouchers site
free, unbiased advice to help everyone        surprised by your renewal quotes. How-          insurance if something goes wrong, but                                               is
make the most of their money.                 ever, don’t accept your renewal quote           check these policies to see what is and                                                       offering some new IT and
Here are their tips on what to think          without first shopping around. You can          isn’t covered.                                                                                tech bargains.
about when renewing and also how to           use price comparison websites, but try to       If you are visiting Switzerland or a coun-
reduce the cost of insurance rather than      use more than one.                              try within the European Economic Area                                                         The latest raft of offers include
leaving yourself at risk.                     If you get a better offer go back and ask       then you should get an EHIC (European
                                              your insurer if they can match or beat it.
                                                                                                                                                                                            both off and online retailers
                                                                                              Health Insurance Card) before you travel.                                                     such as Comet, Amazon and
Buildings insurance                           Also, review your current level of cover to
                                                                                              This entitles you to free or reduced-cost                                                     Currys.
Buildings insurance is usually compul-        see if it’s still right for you. For example,
sory if you have a mortgage, as your          if your car has gone down in value over         treatment in these areas, but does not                                                        The well-known and popular re-
lender will want to make sure that their      the years, think about whether it is still      cover the cost of things such as moun-                                                        tailer Comet now has some ex-
asset is protected. Rebuilding a home         worth buying comprehensive insurance            tain rescue, repatriation to the UK or lost                                                   cellent savings to be had on the
could stretch into the hundreds of thou-      cover. Is the car worth as much as the          or stolen property, so it’s not a replace-                                           site.
sands, so even if you own your house          premiums will cost?                             ment for travel insurance. In other coun-                                                     The latest Comet discount
outright you should think very seriously                                                      tries, healthcare can be very expensive,                                                      codes can be used on orders
before cancelling this type of cover.         Life insurance                                  so think about whether you would you be                                                       over £299 online in the 'Buy
                                              You only need this if you have someone          able to cover the cost of medical treat-                                                      Now, Pay Later in Store' opportu-
Contents insurance                            who relies on you financially (which may        ment as well as the costs of bringing you
                                                                                                                                             Travel insurance                               nity. This makes it perfect for
Spend time calculating the value of your      also include loan and/or mortgage               home to the UK, which could run into           can pay for lost                               those looking to buy new home
contents. There are plenty of online cal-     providers). If you have dependants, think
culators around to help you. Don’t be         about how they would manage financially
                                                                                              thousands.                                     luggage and                                    appliances or a home PC. Cur-
                                                                                                                                                                                            rys is one of the most popular
tempted to under-insure your contents. If     if you died. The older you are when you         Other insurance
                                                                                                                                             other valuables,                               retailers in the UK for new tech-
you insure your contents for £20,000
when they are worth £40,000, the in-
                                              start life insurance the more expensive it
                                              will be, so bear this in mind if you’re
                                                                                              You may have any number of other types         as well as accidents                           nology and home appliances.
                                                                                                                                                                                            The new Currys discount codes
surer would only be obliged to pay out        planning to cancel or not renew a policy.
                                                                                              of insurance in addition to these includ-      or emergency                                   can help people save up to 50
                                                                                              ing pet insurance, critical illness cover
half of what you claim for.
                                                                                              and income protection insurance. It’s
                                                                                                                                             medical bills.                                 per cent on certain computer
                                              Travel insurance
Motor insurance                               Travel insurance can pay for lost luggage       your choice whether to take out or renew       Always check                                   equipment in the stock clear-
                                                                                                                                                                                            ance, and is only available
You can’t get out of this one if you drive,   and other valuables, as well as accidents       these types of policies but think about        what is and isn’t                              through
but make sure you shop around for the         or emergency medical bills. Always              the risk you are taking and whether you
best one for you. We know the cost of         check what is and isn’t covered.                could manage financially if anything hap-      covered.                              The
                                                                                                                                                                                            Amazon discount code from Dis-
motor insurance has gone up signifi-          While travelling in the UK you will proba-      pened.
                                                                                                                                                                                   helps peo-
                                                                                                                                                                                            ple looking to buy an e-reader,
Whatever type of insurance policy you         insurer to see what they can do for you.         same thing on another policy or as part       ance company, put some money away              such as the Amazon Kindle, for
have, there are a few simple steps you        But don’t be persuaded simply by cost;           of your current account package.              (for example in a bank account or credit       as little as £111.
can take to save money while still being      make sure the insurance still meets your                                                       union) instead. This is often good for rel-    There are hundreds of money
adequately covered, according to the          needs.                                           Increase your excess                          atively inexpensive insurance, such as for     saving opportunities at Dis-
Money Advice Service.                                                                          Ask your insurer whether increasing the       mobile phones or pets. If you put, say, at major
                                              Check your employer’s benefits                   excess you would have to pay if some-         £5 away every month, you can use this          high street retailers and special-
Shop around                                   package                                          thing happened would cut your premi-          to buy a new phone if yours is lost, stolen    ist niche stores such as Boden,
Compare like with like to find the best       It may include certain types of insurance        ums. But make sure you could afford the       or damaged, or to pay for treatment for, Travelodge,
deal that you can for your circumstances.     (often private medical, travel or life insur-    excess in the event of making a claim.        your pet, and if you don’t use it, the         Sainsbury’s, Marks & Spencer,
Always make sure you disclose all of the      ance) and you may also be able to in-                                                          money is still there. The downside of this
                                                                                                                                                                                            Tesco and First Choice.
relevant information, otherwise the policy    clude your partner and family on some of         Improve security around your home             is that there isn’t much money in there to
may not pay out when you need it.             the policies, so make sure you check be-         Spending a little money on security locks     start with, so if you need to ‘claim’ in the
                                              fore buying your own.                            or other features may cut your premiums.      first few months, there may not be             The latest deals and information
Review your level of cover                                                                                                                   enough in there.                               can be found at
You may be able to get a lower level of       Don’t double up                                  Consider self-insuring                        For free, personalised advice visit  
cover for a smaller premium. Talk to your     Check that you are not covered for the           Instead of paying a premium to an insur-
                                                                                                                                                                                        SATURDAY APRIL 30 2011                       7

Debt problems: finding a solution
If you find yourself in debt or you’re worried about how a change in circumstances might
                                                                                                                                                                                       available for the IVA being wiped out. Be-
affect the state of your finances, help is available. If you have a problem with debt, it’s                                                                                            cause of this, they have been unable to
important not to panic but don’t ignore it either because unfortunately it won’t go away.                                                                                              pay their IVA payments and now have no
                                                                                                                                                                                       choice but to petition for or be made bank-
There are many government backed schemes available             debts are known as non-priority debts. Priority debts in-                                                               rupt by their creditors. Their house was
to help offer practical help and support.                      clude:                                                                                                                  modified recently for their disabled child
One of these is Citizens Advice, a network of charities        • Mortgage or rent arrears. If you don’t pay these, you                                                                 and the grant works would have to be paid
that helps people resolve their legal, money and other         could lose your home gas and electricity arrears. If you                                                                back to the housing executive if they sell or
problems by providing information and advice, and by           don’t pay these, you can have your supply disconnected                                                                  lose the house within five years.
influencing policy-makers. Here are their tips for dealing     • Rates arrears. If you don’t pay these, a court can use            It’s an unfortunate fact of life, but any-
with debt:                                                     bailiffs to take your goods. If, after this, you still have ar-     one can fall into debt. Families, individu-         * A client had a number of consumer
• Sort out how much money you owe                              rears unpaid, you can be sent to prison                             als, young or old, working or                       debts including store cards. The client has
• Work out which are the most urgent debts for you to          • Court fines such as magistrates’ court fines for traffic          unemployed, debt can affect people in               mental health problems and is under a
pay off                                                        offences. If you don’t pay these, the court could use               all kinds of circumstances. The following           great deal of pressure coping. The CAB as-
• Work out if you’ve got any money to pay your debts           seizure orders. If, after this, you still have arrears un-          case studies from Citizens Advice North-            sisted with a financial statement detailing
off and, if so, how much                                       paid, you can be sent to prison.                                    ern Ireland show how diverse their                  the client’s income and essential expendi-
• Deal with the most urgent debts as a matter of prior-        • Arrears of maintenance payable to an ex-partner or                                                                    ture and her creditors agreed to write off a
                                                                                                                                   clients are.
ity                                                            children. This includes Child Support you owe to the                                                                    number of her debts.
• Look at your options for dealing with the less urgent        Child Maintenance Enforcement Division. If you don’t                * A family approached their local Citizens
debts and work out how to pay them off                         pay these, you could be taken to court If, after this, you          Advice Bureau (CAB) and had multiple                * A client with a number of debts was
• Contact your creditors and make arrangements to pay          still have arrears unpaid, you can be sent to prison.               debt problems and entered into an Individ-          struggling to maintain minimum payments
back what you owe                                              • Income tax or VAT arrears. You can be sent to prison              ual Voluntary agreement (IVA) which is a            but was having to survive on a very low in-
• Work out your options if you don’t have enough               for non-payment of income tax or VAT.                               formal arrangement to pay debts over a set          come. Her creditors would not consider re-
money to pay off all your debts.                                                                                                   period of time with an agreed weekly pay-           ducing repayments until client defaulted on
                                                               • TV licence or TV licence arrears. It’s a criminal offence
                                                               to use a television without a licence. You could be fined.          ment. They were managing to keep up                 her existing payments. The client did not
Sorting out your most                                          In Northern Ireland, the courts don’t use bailiffs but in           their repayments until the mortgage inter-          want to end up having to default as this will
                                                                                                                                                                                       then be on her credit file. Since visiting one
urgent debts                                                   some cases can use seizure orders on certain items.                 est support from the Social Security
                                                                                                                                                                                       of CAB’S money advisers, they have sent
                                                               You may have other debts which you think it is particu-             Agency was reduced in October as a result
Once you’ve made a list of all your creditors, you need                                                                                                                                requests for lower repayments which are
                                                               larly important to pay. For example, if you’re disabled             of the budget. This meant that they had to
to work out which debts are the most urgent.                                                                                                                                           not necessarily based on minimum pay-
                                                               and rely on your car to get around, you may need to                 pay an additional £160 per month towards
Some debts are more urgent than others because the                                                                                                                                     ments.
                                                               make paying for your car a priority debt.                           their mortgage. As they are in receipt of
consequences of not paying them can be more serious
                                                               You need to think very carefully about which debts you              means tested benefits this was impossible
than for other debts. These are known as priority debts.                                                                                                                               If you’re worried about debt and you’d like
                                                                                                                                   to meet and the resultant drop in income
If you’ve got any money to pay off your debts, you must        treat as the most important ones. You must have very                                                                    some more information and advice, visit
                                                                                                                                   from trying to pay the extra mortgage and
make sure you can deal with any priority debts first, be-      good reasons, as you might have to convince a court or                                                        
                                                                                                                                   IVA resulted in their disposable income
fore you deal with any less urgent debts such as credit        your other creditors why it is reasonable for you to treat
card debts, overdrafts and other loans. These type of          these debts as more important than others.

How to deal with mortgage arrears...
                                                                                                                                           Talk to a free and independent money              council or a social landlord and stay there
  If you have a mortgage and you're                                                                                                        advice agency                                     as tenant.
                                                                                                                                           Get free and independent advice to help
  worried about missing payments                                                                                                           you sort out your problems. Your lender           Check whether equity release is a suit-
  because of a change in circum-                                                                                                           may offer a debt advice service, but it may       able option
  stances, then the Money Advice                                                                                                           charge you upfront or add the charges to
                                                                                                                                                                                             If you’re 55 or over you may be able to
  Service could help. The Money                                                                                                            your mortgage debt. You don't have to use
                                                                                                                                                                                             use equity release to raise money from
  Advice Service is a UK wide serv-                                                                                                                                                          your home and stay there. This is not the
  ice which operates as                                                                                                                    Pay what you can                                  same as a sale-and-rent-back scheme.
  Advice4DebtNI in Northern Ire-                                                                                                           Only agree to pay back what you can af-
                                                                                                                                           ford when you discuss your options with           If your lender intends to repossess
  land. It was launched in March to                                                                                                        your lender. By continuing to pay back            your home
  provide free, unbiased advice to                                                                                                         some money, you may be able to reduce             Speak to your lender as soon as possible.
  help everyone make the most of                                                                                                           your arrears.                                     If you've not tried to discuss possible re-
  their money. The Service is free                                                                                                                                                           payment options with them, do so now. It
                                                                                                                                           Check what government help is avail-              may mean you can avoid going to court.
  and helps millions of people who                                                                                                         able
  need practical money advice,                                                                                                             Find out whether you're eligible for a gov-
                                                                                                                                                                                             Things to avoid
                                                                                                                                           ernment-backed mortgage assistance
  whatever their financial circum-                                                                                                         scheme (it may allow you to stay in your
                                                                                                                                                                                             Taking out a loan to pay your debts – these
  stances.                                                                                                                                 home). Free independent money advice              loans can be very expensive and are often
                                                                                                                                           agencies can help you work out whether            secured on your home, so putting it at
Here’s some of their advice on mortgage        Speak to your lender as soon as possi-         your mortgage repayments if your income      you’d be eligible for any of these schemes.       greater risk. Mortgage offers that promise
arrears and repossessions:                     ble                                            has fallen because of redundancy, acci-                                                        to help you avoid repossession may also
If you can't meet your mortgage repay-         They should talk through other possible re-    dent or sickness. You may have taken it      Consider selling your home on the                 put you at greater risk.
ments, or you're worried you might fall be-    payment options with you. For information      out when you got your mortgage.              open market
hind, contact your lender as soon as           on some possible options, visit www.mon-                                                    If you think your situation won't change in       Handing back the keys – you'll still be re-
possible. All mortgage lenders regulated by where you can           Work out your budget                         the long term, think about selling your           sponsible for the mortgage repayments
the Financial Services Authority (FSA), the    download a guide on 'problems paying           Use a budget plan to help you work out       home yourself and renting or moving to a          before your home is sold, and possibly the
UK's financial services regulator, must have   your mortgage'.                                how much you have coming in and how          cheaper property. Use a local estate agent        outstanding balance if the money raised by
procedures for dealing with you fairly.        Make sure you understand the different         much is going out.                           or check online for property prices in your
                                                                                                                                                                                             selling your home isn't enough to pay off
You can also get free independent advice       options so you make the right choice for                                                    area. Ask your lender if you can stay in
                                                                                                                                                                                             what you owe.
from other organisations or you may be         you.                                           Check if state benefits can help             your property until you sell it and make
able to get help with your mortgage from                                                      If you're on a low income or out of work     sure you have a place to live before you
government schemes.                            Check if you have insurance cover              you may be able to claim benefits and get    move out. If this isn't possible, as a last re-   Selling your home without having a place
                                               Mortgage Payment Protection Insurance          some help with your mortgage interest        sort you can sell your home to a company          to live – your local council may not help
If you can't pay your mortgage or think        (MPPI) or Accident, Sickness and Unem-         payments. Use Directgov’s online Benefits    and rent it back from them. But check             you find a place to live if they think you've
you'll have problems :                         ployment insurance (ASU) can help with         adviser or speak to a local advice agency.   whether you can sell your home to your            made yourself intentionally homeless.

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