We have all had credit cards at some stage in our lives, some manage their credit cards and finances. Whilst others struggle where companies like Colony Associates can help.
When I left school I was 17 years old, and my first bank account came with a cheque guarantee card, that also doubled as a credit card. Can you remember those? As I was not yet 18 it had a £2 limit.
When I turned 18 the limit automatically increased without me requesting it. So there I was like many other 18 year olds with a credit card. What could go wrong.
My first introduction to credit cards
My parents have had credit cards as long as I could remember. My Dad has always been a very good influence with money matters. He has never gone overdrawn, always paid his credit card off in full. The best role model you can have.
So there I was an 18-year-old, on a low wage and a credit card. I used to be out every weekend, where I had to have something new to wear that night. It was fine I could use my card to pay and pay it off later, most months I would just pay the minimum amount needed. So the debt never cleared it just kept mounting up. Eventually I was at my limit and was starting to get caught up in the debt I had created.
One Sunday my Mum took me to one side and asked me what was wrong. I had apparently been snappy and distant. I just broke down and told her what was happening. How stupid I had been, how I got caught up in handing my card over and signing a bit of paper. With the worst part that I kept doing it and how bad things were.
She sat and listened and said she would speak to my Dad about it. They helped me out and paid off the balance on the understanding I never did it again. The relief was overwhelming and I had learnt my lesson.
About a year after this, I changed jobs and worked for a Building Society. It was another few years before current accounts were introduced. Once we started offering current accounts I saw first hand how people managed their finances. Some like I was when I was 18 just kept spending, they would increase their overdraft, or credit card limits. I also saw mortgages get into arrears. It really was an eye opener at how easy it is to get credit. I used to get offers for credit cards in the post all the time with guaranteed acceptance.
Then there are those people who have overdraft and credit cards, mortgages and loans etc. Who pay their balances and never go into arrears. But something happens that changes this like losing a job, ill-health. It can happen to anyone, at anytime. I learnt very quickly to never make judgements.
Where To Turn
There are many ways you can turn this around, but the main thing is own it and not bury your head in the sand. Lets look at ways to help
- Get your statements together
- Ring and talk to them about your account
- Ask if they will stop interest charges
- Make a payment plan and stick to it
- If the above fails there are companies out there who can help
- Make an appointment to speak to them
- They can prioritise your debts and make a single monthly payment with low-interest rates
Prioritising Your Finances
I was always to prioritise my finances by
- Always pay your rent/mortgage – it is important to keep a roof over your head
- Bills – make sure all bills are paid (this includes your repayment agreements)
- Work out what money you have left for food, travel etc
- Only spend what you can afford
When I got married and had my own property and bills to pay, I always paid my mortgage and bills first. I would then work out what money I had left for that month and divide that by the number of weeks until my next pay-day. This would then give me what I had to spend each week.
I do still have a credit card, and it is only there for emergencies. We work on the basis if we have the money we can buy something we have seen, or go out. If we do not have the money we simply do not do it. Luckily we have not had to use our credit card and this is something I am happy with. We all know things can happen and having something in place to cover for these times is useful. Most of the time we do forget we have it.
Can You Live Debt Free
Yes you can, or at least with minimal debt. Everyone has some form of debt whether it is an overdraft, a mortgage, loan or credit card. But you can limit the amount of debt you have. I see friends who have high mortgages or rents to pay, have numerous loans, credit cards and live in an overdraft each month. What would you do if all your providers called back the money you owed at the same time? Or something happened and you could not pay your monthly installments? This is why companies like Colony Associates are there. The worst thing you can do is ignore the letters as they really do not go away and just give you a bad credit score.
I am in a very lucky position where the only debt I have is a very small overdraft which if it was called back I could do without too much impact on our lives. I have a debit card but always aware of what we are spending and check my balance as well. I like to work with cash now as it is a reminder of what you are spending but also you can only spend what you have.