Debt Awareness Week 18-24 March 2024

The cost-of-living crisis has left millions struggling with debt.

One in four (24%) of adults in are now either in financial difficulty or would fall into trouble if they suffered a financial shock.

And these figures are expected to increase over the next year, with a growing proportion having trouble making ends meet.

Yet 36.7% of households still don’t know where to go to get debt help. And there’s a huge lack of awareness that free support is available.

Sebrina McCullough, director of external relations at financial wellness platform Money Wellness, said: “The cost-of-living crisis has wreaked havoc on household finances over the past two years. And it’s not just low-income households who are facing difficulties. We have become a country of those who have and those who have not.”

In recognition of Debt Awareness Week (18-24 March), Money Wellness has launched a ‘60 second debt test’ to quickly see if you need help.

And here are eight signs that flag if you have a problem with debt and what to do about it.

You don’t know what you owe

Not knowing how many debts you have or how much you owe is a sign you have a problem.

Stop avoiding bills or leaving credit card statements unopened. Create a spreadsheet for every outstanding debt you have listing the lender, interest rate and amount owed.

Make sure your priority bills – such as rent/mortgage, utility, and council tax – are paid first because missing these payments could result in more serious consequences like losing your home or facing court action.

List the remaining debts starting with the highest interest rates first and pay them down in order because the quicker you pay these, the more money you’ll save in the long run.

You have no or little disposable income left after you’ve paid your bills

49% of the people Money Wellness help live in a budget deficit where their outgoings regularly exceed their income and a further 11% have less than £100 a month to live on.

If you don’t have much disposable income or you’re living in your overdraft, you have a problem with debt.

Create a household budget – you can make this easier by using free online budgeting calculators - include income and all your outgoings. From this you will be able to see if there are areas where you can cut back and make savings.

Your credit cards are maxed out and you’re only making minimum payments

If you are using credit cards to pay for everyday essentials, such as bills and food shopping, you’ll eventually hit your credit limit.

If you’re using 20%-30% of your credit line, you probably have an affordability problem and could do with reining in spending. And if you can only manage to make minimum repayments, you could have a far more serious problem.

Make a plan to pay down your credit cards, starting with the one with the highest interest rate first.

And remember, even if you pay more than the minimum payment each month, having a maxed-out credit card will impact your credit score.

You’ve been turned down for new credit

If you’re turned down for credit or only qualify for a high rate of interest, it means lenders think you have a problem with debt.

Lenders legally have to tell you their reasons for turning you down and show you the credit score they used to assess your application.

Check your credit score with Experian, TransUnion, or Equifax for free to make sure there isn’t any incorrect information on your credit report. And regularly review your credit score to see how it improves as you make positive money decisions.

You’ve borrowed to pay your bills

If you have to borrow money from friends and family to cover expenses, you definitely have a debt problem. The same can be said if you’re regularly dipping into buy-now-pay-later.

Eventually you’ll run out of places to borrow and will have to face your debt. So, make a plan to reduce your debt and increase your income sources or start living within your means. To help with this, make sure you are claiming all the financial support available using a free online benefit calculator.

You have paid bills late or missed payments

If you’re not paying bills on time or missing payments, the chances are you’re incurring more costs. Paying bills late only makes a debt problem worse.

It also signals that your outgoings exceed what you can afford to pay each month.

Contact your creditors and tell them you’re struggling. Most will offer you support and will work with you to come up with a repayment plan that works for both of you. They might also offer to wipe or reduce some of the debt or late charges depending on your circumstances.  

Your debts are out of control when debt collectors start calling or knocking at the door.

You’ve lied about spending

Fibbing about how much you’re spending is a clear sign that you know you’re in over your head. Being honest about your situation is the first step to finding a solution.

You’re losing sleep about money

You get financial insomnia when your worries over money prevent you from sleeping.

If your debts are causing you anxiety and stress, then it’s time to get help.

Where to get help

Debt can be isolating but it’s important to remember you’re not alone. Get free debt help.