WEBVTT - A Matter of Life and Debt 0:00:00.240 --> 0:00:03.060 This series is brought to you by L&G, helping you 0:00:03.060 --> 0:00:04.980 build a future that's a little bit richer. 0:00:06.900 --> 0:00:09.630 Hello, I'm Iona Bain and welcome along to A Little 0:00:09.630 --> 0:00:12.360 Bit Richer, brought to you by Legal and General. From 0:00:12.360 --> 0:00:15.239 credit cards to car finance and buy- now- pay- later, 0:00:15.540 --> 0:00:18.570 debt has quietly become a normal part of life for 0:00:18.570 --> 0:00:21.869 our generation. But just because its common doesn't mean it's 0:00:21.989 --> 0:00:25.290 easy to deal with or talk about. Whether you're just 0:00:25.290 --> 0:00:27.900 about keeping on top of repayments or starting to feel 0:00:27.900 --> 0:00:30.840 the pressure, living with and managing debt can be a struggle. 0:00:31.170 --> 0:00:33.089 Debt is a fact of life, something we all have 0:00:33.090 --> 0:00:35.850 to deal with, but hopefully we can do that without shame. 0:00:36.270 --> 0:00:38.550 That's why I'm so pleased to be joined by an 0:00:38.550 --> 0:00:41.280 incredible woman who's done loads of work to help raise 0:00:41.280 --> 0:00:44.310 awareness of debt and the support available for those struggling 0:00:44.310 --> 0:00:47.879 with it. That's Claer Barrett. Claer is the consumer editor at 0:00:47.880 --> 0:00:51.510 The Financial Times, a columnist, broadcaster, and the force behind 0:00:51.510 --> 0:00:57.300 the FT's financial literacy and inclusion campaign. Welcome, Claer. 0:00:57.480 --> 0:00:58.590 Thanks for having me, Iona. 0:00:59.310 --> 0:01:01.680 Claer, how common is it for Millennials in the UK 0:01:01.680 --> 0:01:05.640 to live with debt? How has society's attitude towards debt 0:01:05.670 --> 0:01:07.050 changed over the years? 0:01:07.380 --> 0:01:10.890 Well, debt is a fact of life. The reason for 0:01:10.890 --> 0:01:15.870 that is because life has become more expensive for subsequent generations. 0:01:16.200 --> 0:01:19.440 Before we go any further, let's just say if you 0:01:19.440 --> 0:01:22.770 have debt, whether it's good debt or bad debt, it's 0:01:22.770 --> 0:01:26.340 not a personal failing. This is something that is affecting 0:01:26.340 --> 0:01:30.030 all of us. But also, it's not something that eating 0:01:30.030 --> 0:01:33.810 fewer avocados can necessarily resolve. There are all kinds of 0:01:33.810 --> 0:01:38.520 reasons for that. Salaries stagnating, particularly for graduates who have 0:01:38.520 --> 0:01:41.520 got ever- higher amounts of student loan debt that they 0:01:41.580 --> 0:01:45.300 need to repay coming off their salaries every month. So 0:01:45.300 --> 0:01:47.910 much so, that there's a new term that I've become 0:01:47.910 --> 0:01:51.210 aware of. Negative wealth. Have you ever heard of this? 0:01:51.360 --> 0:01:52.350 I can't say I have. 0:01:52.410 --> 0:01:57.180 Okay. Negative wealth is where your debts, which include student loans, 0:01:57.180 --> 0:02:01.530 but also overdrafts, credit cards, any buy- now- pay- later 0:02:01.950 --> 0:02:05.910 add up to more than the value of your assets. 0:02:06.300 --> 0:02:08.430 Things that you own that are worth money, like a 0:02:08.430 --> 0:02:12.389 car or a property, say. So much so, around one- 0:02:12.389 --> 0:02:17.010 third of 25-to- 34- year- olds in the UK, it's said, 0:02:17.490 --> 0:02:21.810 are in negative wealth. Now this is a survey by 0:02:21.810 --> 0:02:25.320 the Fairness Foundation, so this is proper research. The biggest 0:02:25.320 --> 0:02:27.570 reason why one group of people might be in negative 0:02:27.570 --> 0:02:31.470 wealth compared to positive wealth is, guess what? Being on 0:02:31.470 --> 0:02:34.380 the property ladder. If you've managed to get on the 0:02:34.380 --> 0:02:37.830 property ladder, you will have an asset. But for those 0:02:37.830 --> 0:02:41.370 of us that didn't have that helping hand, be paying 0:02:41.490 --> 0:02:46.260 extortionate rents in the private sector. The big takeaway for 0:02:46.260 --> 0:02:51.210 me here is that education and knowledge about debt so 0:02:51.210 --> 0:02:54.060 that we can minimize the wrong type of debt and 0:02:54.060 --> 0:02:56.399 be aware of the problems that we can get into 0:02:56.460 --> 0:02:59.550 if we take out too much debt is embedded in 0:02:59.550 --> 0:03:01.530 us at an early age because that is going to 0:03:01.530 --> 0:03:05.070 make the biggest difference for when the negative will hopefully 0:03:05.070 --> 0:03:07.290 turn positive later in life. 0:03:07.980 --> 0:03:10.560 Give us a sense of the kinds of debts that 0:03:10.560 --> 0:03:13.829 young people are leaning on in order to get through life? 0:03:14.070 --> 0:03:18.030 Well, people talk about good debts and bad debts. Let's 0:03:18.030 --> 0:03:21.000 start with the good. The most obvious example is probably 0:03:21.360 --> 0:03:24.600 student loans and mortgages. This is why we need to 0:03:24.600 --> 0:03:29.910 understand how debt works, how things like credit scores affect 0:03:29.970 --> 0:03:32.940 how much money we can borrow in the future. It's 0:03:32.940 --> 0:03:36.000 those forms of so- called bad debts that could put 0:03:36.000 --> 0:03:38.790 you down the rankings in terms of your credit score. 0:03:39.390 --> 0:03:44.640 Things like credit cards, if not managed well. Things like buy- now- pay- later. 0:03:44.700 --> 0:03:46.620 If you take out too many, then you're going to 0:03:46.620 --> 0:03:50.250 have to rely on credit cards or your overdraft to 0:03:50.250 --> 0:03:55.320 pay the bills, because overdraft is typically 40% interest annually, 0:03:55.590 --> 0:04:00.420 credit cards typically 20% interest annually. But one- in- five 0:04:00.420 --> 0:04:03.870 people in the UK have an impaired credit score, which 0:04:03.870 --> 0:04:06.600 mean if they want to borrow using a credit card, 0:04:07.140 --> 0:04:11.070 it's even more expensive. Typically, an interest rate per year 0:04:11.130 --> 0:04:14.910 of around 40 or even 50 percent if you want 0:04:14.910 --> 0:04:19.620 to borrow money. There's some common forms of bad debt 0:04:19.680 --> 0:04:24.599 and bad practices managing debt. It's often unfortunately, Iona, young 0:04:24.600 --> 0:04:29.670 people who don't understand what they're getting into who make those mistakes. 0:04:29.730 --> 0:04:32.040 Then they can hang around and blight your credit file 0:04:32.040 --> 0:04:33.659 for six or seven years. 0:04:33.930 --> 0:04:37.080 Well, let's get into why that can turn into such 0:04:37.080 --> 0:04:39.510 a problem for young people further down the line. Just 0:04:39.510 --> 0:04:44.220 explain what your credit score is and what it's based on? 0:04:44.610 --> 0:04:48.599 Basically, your credit score is an indication that lenders will 0:04:48.600 --> 0:04:51.750 look at at how creditworthy you are. If I were to 0:04:51.750 --> 0:04:54.450 lend you money, would you pay it back on time 0:04:54.660 --> 0:04:58.650 and would you make those repayments regularly? Because if you can, 0:04:58.980 --> 0:05:01.229 then I'll be more likely to reward you with a 0:05:01.230 --> 0:05:05.159 lower rate of interest. Whereas somebody who has paid bills 0:05:05.160 --> 0:05:08.489 late or has borrowed more than they can afford, has 0:05:08.490 --> 0:05:11.580 got into difficulty paying that money back, you can see 0:05:11.580 --> 0:05:13.620 that they've had problems in the past because lenders can 0:05:13.620 --> 0:05:16.560 look through your credit file, and they might charge you 0:05:16.560 --> 0:05:19.050 then a higher rate of interest if they're going to 0:05:19.050 --> 0:05:22.349 let you borrow. Or they might decide not to lend 0:05:22.350 --> 0:05:25.380 to you at all. Let's say you apply for a 0:05:25.380 --> 0:05:28.080 credit card. The credit card company says, " Here you go, 0:05:28.529 --> 0:05:33.450 here's a card. You've got a credit balance of £ 10,000." Technically, 0:05:33.450 --> 0:05:35.099 you could take that card, you could go out, and you could 0:05:35.100 --> 0:05:37.950 buy something for £ 10,000. But the reason why you shouldn't 0:05:37.950 --> 0:05:42.330 do that is because of something called credit utilisation. Now, 0:05:42.690 --> 0:05:47.220 this is really big issue with people's credit scores. If 0:05:47.220 --> 0:05:50.550 you borrow more than 30% of what your credit limit is, 0:05:51.450 --> 0:05:54.570 that's not going to trouble the lender too much. But 0:05:54.570 --> 0:05:58.320 if you were to borrow over 50% of the limit they think, " Oh, 0:05:58.350 --> 0:06:02.430 they're utilising quite a lot of credit. This is making 0:06:02.430 --> 0:06:04.440 them a higher risk." If they want to borrow any 0:06:04.440 --> 0:06:07.350 more money maybe further down the line for a mortgage, 0:06:07.740 --> 0:06:11.250 all of those repayments are going to eat away into 0:06:11.250 --> 0:06:15.600 their monthly pay packets. It's going to make their affordability 0:06:15.720 --> 0:06:18.360 look much worse if they're applying for a bigger loan 0:06:18.360 --> 0:06:21.270 because more of their money is going towards servicing their debts. 0:06:21.660 --> 0:06:25.170 That could also start to pull down your credit scores. 0:06:25.920 --> 0:06:28.260 If you've got a really high rate of interest on a 0:06:28.320 --> 0:06:33.180 credit card, commonly 20%, often much higher, over time, the 0:06:33.180 --> 0:06:36.690 magic of compounding is going to work against you. The 0:06:36.690 --> 0:06:38.669 amount of time it will take you to pay off 0:06:38.670 --> 0:06:41.610 that balance and the amount of interest that you'll repay 0:06:41.910 --> 0:06:44.460 on top of the money that you've actually borrowed could 0:06:44.550 --> 0:06:47.220 really surprise you. If you know that before you took 0:06:47.220 --> 0:06:49.710 out the credit card, would you have taken it out? 0:06:49.770 --> 0:06:52.860 It feels like a hidden trap, whereby if you don't 0:06:52.860 --> 0:06:56.489 know that you're not really supposed to spend over 50% 0:06:56.700 --> 0:06:59.820 of the credit available to you, and yet you're punished 0:06:59.820 --> 0:07:02.190 for it later, I would imagine a lot of young 0:07:02.190 --> 0:07:05.969 people would say, " That's really unfair." If people are feeling 0:07:05.970 --> 0:07:08.460 like they have to take our a credit card in order to 0:07:08.460 --> 0:07:10.980 improve their credit score, but don't really want to for 0:07:10.980 --> 0:07:13.890 all the reasons we've discussed, what are the alternatives? 0:07:14.310 --> 0:07:16.500 People think that it's going to boost my credit score 0:07:16.500 --> 0:07:18.150 if I do this, it can actually end up getting 0:07:18.150 --> 0:07:21.660 people into deeper financial doo- doo because they can end up spending 0:07:21.990 --> 0:07:24.930 more money and have a bigger debt to repay and 0:07:25.050 --> 0:07:29.280 affect their affordability levels going forward. I would say go 0:07:29.280 --> 0:07:32.640 to your credit report, check first of all that there 0:07:32.640 --> 0:07:35.160 aren't any mistakes on there that need to be corrected. 0:07:35.160 --> 0:07:38.580 But Experian, one of the credit file people, they offer 0:07:38.580 --> 0:07:41.910 a service whereby with open banking, you can share your 0:07:41.910 --> 0:07:46.080 details with them. They can count regular payments that you're 0:07:46.080 --> 0:07:49.680 making towards household bills, which could include paying your rent 0:07:49.680 --> 0:07:52.560 on time, paying our council tax on time that could 0:07:52.560 --> 0:07:56.040 boost your score by as much by 100 points just by 0:07:56.040 --> 0:07:57.450 linking up your data. 0:07:57.840 --> 0:08:00.090 It's just about getting the basics right, that'll do an 0:08:00.090 --> 0:08:01.230 awful lot for your credit score? 0:08:01.560 --> 0:08:04.980 Absolutely. Then when you do come to apply for a mortgage, 0:08:05.280 --> 0:08:08.430 going through a mortgage broker who will do a detailed 0:08:08.430 --> 0:08:12.330 breakdown of your outgoings. The crucial thing that mortgage lenders 0:08:12.330 --> 0:08:15.840 are looking at is affordability. How much money do you 0:08:15.840 --> 0:08:18.810 have left at the end of month after meeting your 0:08:18.810 --> 0:08:23.940 other commitments? Of course, those commitments include debt repayments. Student 0:08:23.940 --> 0:08:26.430 loans are a factor of that. But if you've got 0:08:26.430 --> 0:08:28.530 a big credit card balance, even if it's on a 0:08:28.530 --> 0:08:32.490 naught percent interest, that's hanging around you. They can see 0:08:32.490 --> 0:08:33.960 eventually you're going to have to pay that off and 0:08:33.960 --> 0:08:36.809 that's the sort of thing that could count against you 0:08:36.809 --> 0:08:39.390 when you come to apply for more credit. It's a two- 0:08:39.390 --> 0:08:40.020 way street. 0:08:41.100 --> 0:08:44.490 How can people distinguish between good and bad debt? We've 0:08:44.490 --> 0:08:47.790 talked about some examples, but what are the key questions 0:08:47.790 --> 0:08:49.890 that people need to ask themselves when they're taking out 0:08:49.890 --> 0:08:52.859 debt in order to make sure that they're going to 0:08:52.860 --> 0:08:54.480 use it in a responsible way? 0:08:54.630 --> 0:08:57.240 Well, I think if you're taking out any form of 0:08:57.240 --> 0:09:01.290 debt to pay off another debt, that is a red flag. 0:09:01.320 --> 0:09:03.840 You should be thinking to yourself, " Hang on a minute. 0:09:04.050 --> 0:09:05.670 Are things getting out of control here?" 0:09:06.000 --> 0:09:09.960 What about buy- now- pay- later? That's grown in popularity massively, 0:09:10.020 --> 0:09:11.729 but what are the risks with that? 0:09:11.880 --> 0:09:14.579 Okay. Buy- now- pay- later, the big attraction of it 0:09:14.580 --> 0:09:18.059 of course is that the payments are interest- free and 0:09:18.059 --> 0:09:21.720 they can be split over three months. Frankly, if you're 0:09:21.720 --> 0:09:24.300 on a tight budget, that could be a godsend rather 0:09:24.300 --> 0:09:27.780 than paying 20%, 40% or more to borrow money on 0:09:27.780 --> 0:09:29.910 a credit card. But let's step back a bit and 0:09:29.910 --> 0:09:33.090 think about how the business model of buy- now- pay- 0:09:33.090 --> 0:09:36.210 later actually works. Why is it that they don't charge 0:09:36.210 --> 0:09:41.400 us interest? How, therefore, do these gigantic businesses make money? 0:09:42.179 --> 0:09:46.679 The answer is the retailers pay them. If a retailer 0:09:46.679 --> 0:09:50.160 offers buy- now- pay- later on its website, it knows 0:09:50.309 --> 0:09:54.360 it will sell more stuff. We will feel like we've 0:09:54.360 --> 0:09:58.709 been given magic permission to spend more money. We might 0:09:58.710 --> 0:10:00.689 have bought a pair of jeans, but now we know 0:10:00.690 --> 0:10:02.459 that we can pay in three. Then we'll buy a 0:10:02.460 --> 0:10:04.290 pair of jeans, a top, and a pair of shoes. 0:10:04.950 --> 0:10:06.780 It can make us spend more. 0:10:06.780 --> 0:10:08.581 Spend more than we necessarily would have wanted to. 0:10:08.581 --> 0:10:12.300 At the moment, we have to self- regulate. A thrifty 0:10:12.330 --> 0:10:15.030 tip that I've used for years is whenever I find 0:10:15.030 --> 0:10:18.750 myself doom- scrolling online, putting items into the basket, I 0:10:18.750 --> 0:10:21.660 just leave them there for 24 hours. The amount of 0:10:21.660 --> 0:10:24.809 times I think, 24 hours later, " Actually, I've got a 0:10:24.809 --> 0:10:28.800 top exactly like that in my wardrobe already." Or, better still, 0:10:28.890 --> 0:10:31.709 I can find one on vintage. Better for the planet, 0:10:31.800 --> 0:10:35.370 better for your pocket. But the amount of psychology that 0:10:35.370 --> 0:10:38.790 these websites, the lifestyle they're selling, it's very, very hard 0:10:38.790 --> 0:10:39.360 to resist. 0:10:40.110 --> 0:10:43.410 It's about building up that awareness of how the business 0:10:43.410 --> 0:10:46.500 models of credit card providers and buy- now- pay- later 0:10:46.620 --> 0:10:50.070 providers operate so that we can then make informed decisions. 0:10:50.070 --> 0:10:51.030 Absolutely, Iona. 0:10:52.200 --> 0:10:55.140 What are some practical steps that people can take to 0:10:55.140 --> 0:10:57.600 get on top of their debt repayments and reduce their 0:10:57.600 --> 0:10:58.440 debt over time? 0:10:58.800 --> 0:11:01.920 I think the biggest thing is the bigger picture. Now, 0:11:02.010 --> 0:11:04.500 a lot of the time, people lose track of how 0:11:04.500 --> 0:11:09.570 much debt they've actually got because it's spread across multiple cards, overdrafts, 0:11:09.570 --> 0:11:13.950 different accounts, different sources of debt that they're frantically trying to 0:11:13.950 --> 0:11:16.319 keep on top of. I think facing up to it 0:11:16.620 --> 0:11:20.640 and setting out what you've got where, but also having 0:11:20.640 --> 0:11:23.429 a bigger think about how has that debt been created. 0:11:23.670 --> 0:11:26.190 How has it built up? What have you actually spent 0:11:26.190 --> 0:11:29.550 the money on? Looking back at your statements will give 0:11:29.550 --> 0:11:31.709 you an idea, but often it's the cost of the 0:11:31.710 --> 0:11:34.770 interest which is the biggest factor in there pushing up 0:11:34.770 --> 0:11:38.610 the payments. We talk about often two methods for clearing debts, 0:11:38.610 --> 0:11:43.860 the avalanche method and the snowball method. Briefly, the avalanche 0:11:43.860 --> 0:11:47.220 method is listing all your debts, working out which one 0:11:47.220 --> 0:11:49.920 has got the most expensive interest rate. There will be 0:11:49.920 --> 0:11:53.849 one on there that's quite killer. You say, " Okay, I'm 0:11:53.850 --> 0:11:56.700 going to prioritize paying off that debt. I'll pay the 0:11:56.700 --> 0:11:59.400 minimum repayment on all of the others so they're cheaper, 0:11:59.460 --> 0:12:02.309 lower interest rates. But the one that's got the real sky- 0:12:02.309 --> 0:12:04.740 high interest rate, it's in my interest to clear that 0:12:04.740 --> 0:12:07.589 the fastest." I'm going to avalanche any spare money I've 0:12:07.590 --> 0:12:12.480 got into killing that card. The other method, the snowball method, 0:12:12.720 --> 0:12:16.050 is that you target the smallest debt first. You might think, " Okay, 0:12:16.050 --> 0:12:19.559 well what's the point in doing that?" But psychologically, if 0:12:19.559 --> 0:12:23.490 you can say, " I've now cleared that store card, that's gone," 0:12:23.550 --> 0:12:25.860 that could give you the momentum to then go on 0:12:25.860 --> 0:12:28.920 and tackle the next one. Maybe you do a snowball first, 0:12:28.920 --> 0:12:31.050 and then you do an avalanche. But the key with 0:12:31.050 --> 0:12:35.160 all of these things is get rid of the credit 0:12:35.160 --> 0:12:38.010 card when you've paid it off. All too often, I 0:12:38.010 --> 0:12:42.270 see people clearing debts on cards, they keep the card open. 0:12:42.809 --> 0:12:44.610 That's why I said look at why those debts built 0:12:44.610 --> 0:12:48.240 up in the first place, because whatever habit or problem 0:12:48.270 --> 0:12:50.400 that was caused for you to build this up in 0:12:50.400 --> 0:12:52.559 the first place, if you haven't closed off the card, 0:12:52.559 --> 0:12:54.451 then it's easy sadly for that to build up once again. 0:12:54.451 --> 0:12:56.550 Then you're right back to square one. 0:12:56.550 --> 0:12:56.969 Exactly. 0:12:56.970 --> 0:12:59.730 Which you don't want. What can someone do if they 0:12:59.790 --> 0:13:04.559 already have debt issues, they feel that that debt is 0:13:04.559 --> 0:13:07.950 getting out of control, what solutions or organizations can they 0:13:07.950 --> 0:13:08.460 turn to? 0:13:08.640 --> 0:13:12.569 Okay. If you are listening to this podcast and you 0:13:12.720 --> 0:13:16.679 have even a glimmer of a feeling that you might 0:13:16.830 --> 0:13:20.429 benefit from speaking to somebody about your debts, maybe you 0:13:20.460 --> 0:13:24.660 don't know how much they add up to. That's quite common, denial. Thinking, " Right, 0:13:24.660 --> 0:13:26.579 I'm not going to look at this. They're still saying 0:13:26.580 --> 0:13:29.160 I can borrow. I think I might borrow more money 0:13:29.160 --> 0:13:31.350 to pay off that card." Or you've had debt that's 0:13:31.350 --> 0:13:33.900 been hanging around for a long time that you're only 0:13:33.900 --> 0:13:37.260 paying off the minimum payment on so the interest costs, again, 0:13:37.260 --> 0:13:40.230 are getting higher and higher. If you find that the 0:13:40.230 --> 0:13:43.740 value of your debt isn't really falling anymore, it seems 0:13:43.740 --> 0:13:46.500 to be growing, these are all signs, take it from me, 0:13:46.800 --> 0:13:50.939 that you would benefit from talking to a debt charity. Now, 0:13:51.090 --> 0:13:54.270 most people would say, " I don't need help from a 0:13:54.270 --> 0:13:58.380 charity! I'm not a charity case." But the reason why you should is, number one, 0:13:58.710 --> 0:14:02.069 most of the funding for debt charities comes from the 0:14:02.070 --> 0:14:03.270 finance industry. 0:14:03.330 --> 0:14:03.390 Ah. 0:14:03.690 --> 0:14:08.099 Because they have a legal and regulatory obligation to help 0:14:08.100 --> 0:14:11.429 customers who are in problem debt. A certain percentage of 0:14:11.429 --> 0:14:15.630 customers will fall into problem debt, no matter how big 0:14:15.630 --> 0:14:18.630 the warnings are. The second big fact is that it is 0:14:18.630 --> 0:14:22.050 never too early to ask for help if you're worried 0:14:22.080 --> 0:14:25.050 about the debts you're in. As human beings, we're hard- 0:14:25.050 --> 0:14:27.990 wired to try and sort these problems out for ourselves. Typically, 0:14:27.990 --> 0:14:31.620 we'll look for solutions online. But the problem with that 0:14:31.620 --> 0:14:35.130 is is that the kind of things that come up in internet search engines, 0:14:35.130 --> 0:14:39.870 the sponsored ads are often organizations that profit from selling 0:14:39.870 --> 0:14:43.140 people in problem debt a particular kind of solution. 0:14:43.260 --> 0:14:44.550 Like a debt management plan? 0:14:44.550 --> 0:14:48.660 Exactly. An IVA is another one, a form of insolvency 0:14:48.960 --> 0:14:52.410 where you pay a fee to enter into an arrangement. Now, 0:14:52.470 --> 0:14:54.690 that might be the right solution for you. But if 0:14:54.690 --> 0:14:58.260 you're going to a provider who only offers that as a solution, 0:14:58.560 --> 0:15:01.650 something else including a debt relief order where they can 0:15:01.650 --> 0:15:03.960 wipe off some of your debt, you never have to 0:15:03.960 --> 0:15:06.660 pay them back, you're not going to find out about 0:15:06.660 --> 0:15:10.380 those kinds of solutions until you speak to an independent 0:15:10.530 --> 0:15:14.670 debt charity who can work out what the best solution 0:15:14.910 --> 0:15:18.030 is for you. It doesn't have a motivation to put 0:15:18.030 --> 0:15:21.600 you in one kind of plan or another. When you've 0:15:21.600 --> 0:15:24.210 done that, you've got a much better chance of getting 0:15:24.240 --> 0:15:27.630 out of debt and getting your finances back on track. The 0:15:28.050 --> 0:15:30.359 final tip I'd say, you don't have to talk to a 0:15:30.360 --> 0:15:32.610 debt charity on the phone. A lot of people find, 0:15:32.610 --> 0:15:35.520 because there's a shame attached to debt, wrongly attached to 0:15:35.520 --> 0:15:38.580 being in debt, sometimes people just can't face having a 0:15:38.580 --> 0:15:41.190 conversation about it. But all of the big debt charities 0:15:41.190 --> 0:15:42.990 tend to do web chat now, which I think is 0:15:42.990 --> 0:15:46.440 a fantastic innovation. I would say Step Change, they're one 0:15:46.440 --> 0:15:50.220 of the biggest debt charities in Britain. Citizen's Advice, particularly 0:15:50.220 --> 0:15:53.130 good if you've got problems with bills that you can't pay, 0:15:53.130 --> 0:15:56.460 things like council tax which can get quite nasty very quickly. 0:15:57.000 --> 0:16:01.320 Then if you've got any sort of intermingling of business 0:16:01.320 --> 0:16:05.100 debts and personal debts, maybe you're self- employed, Business Debt 0:16:05.100 --> 0:16:07.440 Line are the place to go. All of these places 0:16:07.440 --> 0:16:10.440 are free to contact and the advice that they give 0:16:10.440 --> 0:16:11.340 you is free. 0:16:11.550 --> 0:16:13.590 That's really good to know that you could even do 0:16:13.590 --> 0:16:15.810 this on your lunch break at work. Or when you 0:16:15.810 --> 0:16:18.180 get home from work and you've got the TV on, 0:16:18.180 --> 0:16:20.609 you could just drop them a line, reach out. Claer, 0:16:21.870 --> 0:16:23.970 what are the three tips that you would give to 0:16:23.970 --> 0:16:26.340 someone listening who wants to reduce their debt and make 0:16:26.340 --> 0:16:28.800 sure that they are debt smart in the future? 0:16:30.360 --> 0:16:34.140 I would say just have a great awareness generally of your finances, what's 0:16:34.140 --> 0:16:36.330 coming in, what's going out. You don't need to sit 0:16:36.330 --> 0:16:38.190 down and do a formal budget. There are lots of 0:16:38.190 --> 0:16:42.810 apps nowadays, like Snoop and Emma, that use open banking 0:16:42.810 --> 0:16:46.590 to go through your income and expenditure and make suggestions. 0:16:46.890 --> 0:16:49.229 But just be aware of what you've got. And also, 0:16:49.230 --> 0:16:51.780 the interest rates that you're paying on some of these 0:16:51.780 --> 0:16:54.750 debts and being super on top of when repayments for 0:16:54.750 --> 0:16:57.600 things like buy- now- pay- later are due. If you 0:16:57.600 --> 0:17:00.420 don't meet them on time, you'll get a fine. It 0:17:00.420 --> 0:17:02.730 might be interest- free, but that is going to cost 0:17:02.730 --> 0:17:06.869 you money ultimately. Finally, I would say go online. There 0:17:06.869 --> 0:17:10.590 are so many good free resources online from the main 0:17:10.590 --> 0:17:15.390 debt charities themselves. Step Change, Citizen's Advice, and also Business 0:17:15.390 --> 0:17:18.330 Debt Line if you're self- employed. There's a wealth of 0:17:18.330 --> 0:17:21.659 information out there. We've also go my charity that I'm a 0:17:21.660 --> 0:17:25.710 trustee of, FLIC, the Financial Literacy and Inclusion Campaign. We've 0:17:25.710 --> 0:17:29.609 made a free guide to managing debt containing all kinds 0:17:29.609 --> 0:17:34.859 of help, resources, links to further sources of support and information. 0:17:35.220 --> 0:17:38.820 I believe, Iona, that you have helpfully attached it to 0:17:38.820 --> 0:17:40.859 the show notes of today's episode. 0:17:40.980 --> 0:17:43.590 Well, there we go. A good first step for people 0:17:43.590 --> 0:17:45.750 to check out. Wonderful. Thank you so much, Claer. 0:17:46.109 --> 0:17:47.010 Thank you for having me. 0:17:49.320 --> 0:17:53.520 Thank you so much, Claer, some really great advice there. Next time, 0:17:53.520 --> 0:17:57.000 friend of the show and financial advisor Emmanuel Asuquo will 0:17:57.000 --> 0:18:00.150 be here to help us put good friction in our finances. 0:18:00.720 --> 0:18:03.090 This podcast is brought to you by LNG. You can 0:18:03.090 --> 0:18:07.679 keep up with the show on YouTube, TikTok, and Instagram @legalandgeneral. I'd love 0:18:07.680 --> 0:18:10.290 it if you could follow the podcast, leave us a review, 0:18:10.470 --> 0:18:13.260 and help others get a little bit richer, too. Thanks 0:18:13.260 --> 0:18:15.510 for listening. Until next time, see you soon.