Financial Difficulties: How to Cope & Avoid Debt

Updated: August 2023

Did you know that as of 2022, the average UK household debt stands at a staggering £60,580? Navigating the stormy seas of financial difficulties can be daunting, and it’s easy to feel overwhelmed.

In this article, we explore the nine most common reasons why people in the UK fall into debt and offer practical advice on how to cope, avoid, and ultimately conquer these financial challenges.

Now that we’ve gone over what the 9 different types of financial difficulties are, we can go ahead and look at them in a little more detail by outlining the best ways to cope with these problems and ultimately how one can remove these difficulties from their life entirely which should allow them to move onto the next chapters of their lives.

1) Mortgage Arrears

Falling behind in mortgage payments is probably the number one reason why homeowners get into debt. There are several reasons why this could happen but the most important thing at this point is to act quickly as not dealing with mortgage arrears right away could result in your home being repossessed.

Below are a few things you should do once it becomes apparent that you’re going to struggle with your mortgage payments.

• Contact your lender and explain your situation, do not ignore them if they try and get in touch with you.
• Ask your lender for help. The help can come in many forms and includes, a payment holiday (this means your lender will give you a few months break from mortgage payments) and increasing your mortgage term or asking the government for help with your mortgage (Also known as Support for Mortgage Interest)
• Get free help and advice from support teams like Citizens Advice.
• A bonus none traditional solution to solving mortgage arrears is to sell your home to house buyers who will pay cash for your property

2) Reduced Salary, Redundancy, Job Loss or Retirement

There are many job related issues that could lead to one falling into debt. Lets look at them individually.

Reduced Salary

If you live a certain type of lifestyle but then for whatever reason learn you’re going to be getting paid less it can be tough to adapt right away. Things like mortgage payments, bills, home maintenance and car fee’s can add up and with a reduced wage you’re unlikely to be able to support your current lifestyle.

The first thing you should do is find out why your salary is being reduced and see if there is anything you can do about it. If nothing can be done then you have two options.

Option one is to change your lifestyle so you have less expenditure which allows you to keep up with all your payments and not fall into debt. If that means selling your sports car then that’s a comprise you’ll just have to make.

Option two is that you start job hunting and try to find a new job that pays a similar amount to what you used earn. Both options have their pro’s and con’s but ultimately it comes down to your personal circumstances and what you need and want the most in your life.

Redundancy & Job Loss

If you’ve been made redundant or have lost your job, the only real option you have is to get out there and look for a new job. If you liked where you were working previously, see if they have any internal vacancies going that you could apply for.

Retirement

Having to worry about debt in old age can be very tough. Here are a few solutions that could help you through this situation.

• Go back to work temporarily until your debts have cleared.
• Make sure you’re claiming every benefit you’re entitled to.
• Downsize your home, especially if your children have moved out and you no longer need the space.
• Use your savings and pension to pay off debts. It makes more sense to put them to use rather than having the stress of people & firms continually hounding you for money.
• Alter your lifestyle so you’re spending less and saving more.

3) Divorce

There’s no getting past it – divorce is expensive so if there is even a slight chance that you can save your marriage and avoid it you should give it a try!

The divorce fee’s usually end up being so high because of the legal fee’s involved and whether both parties agree to the divorce or not.

In order to avoid any problematic financial situations after the divorce – during it, you should try and get the best spilt of assets possible so you have something to build on when you start the next chapter in your life.

In addition, do your best to keep control of your emotions so they don’t affect you financially.

4) Tax

There are a number of taxes we need to pay these days as UK residents so it’s not surprising some people struggle and get into financial trouble because they can’t keep up with payments.

5) Debt from Credit Cards & Loans

Debt can come in a number of forms and this includes debt from credit cards and loans. Credit cards can be useful but at the same time, if used carelessly, they can leave you in mountains of debt which can be tough to get out of.

If you’re in credit card debt or think you might be at some point in the future, a few things you should try to do are:

• Pay off more than the minimum monthly amount so you can avoid overpaying as some card payments come with high interest rates.
• Set a limit on your credit card so you can’t overspend. This should also improve your credit score in the long term if you keep up with all the payments.
• Never get a second credit card as only the original card owner is liable for any debt. If you have a second card for a family member or spouse and they use it, everything is on you to pay it back regardless of who used it.

All that said, the simple solution for this financial problem is to stop using a credit card altogether.

If you’ve taken out a loan your first goal should be to pay off the loan ASAP as you want to avoid paying more than you have to due to high interest rates. If you’re struggling to make monthly loan payments regularly, you may want to consider refinancing your loan or taking out a debt consolidation loan which you can use to pay off all your debts at once, but then agree a fair monthly fee which you can afford.

Be sure to stay in contact with your lender and explain your situation to them at all times to avoid going into more debt.

6) Health Issues

Health issues are another common reason why people sometimes fall into financial disarray.

Health problems can arise both expectedly and unexpectedly. If people know their going to be off for a long while they can plan ahead a little and prepare themselves financially for the road ahead, however when health issues crop up unexpectedly it can be very hard to deal with.

Irrespective of how these health issues crop up, it’s important you act quickly to avoid debt. The most important thing here is to get in touch with your local council and find out about all the benefits you’re entitled to. This includes but is not limited to:

• Council tax.
• Housing benefit.
• Personal independence payment.
• Statutory sick pay.
• Job seekers allowance.

And more. Be sure to research thoroughly and put in any claims as soon as you can so you don’t fall behind in any payments.

7) Family Bereavement

The loss of a family member can be a very traumatic experience and one which many people struggle to get through. With so many mixed emotions people often become detached from society and lose the will to work which results in them losing their job and ultimately falling into debt.

For more information and help on how to cope with bereavement visit the NHS.

8) Moving Out on your Own

Many people, especially the younger generation underestimate the costs involved when living by yourself so when they do finally move out and begin calculating the costs, it can turn into daunting and intimidating experience.

There is a time for everything and that includes moving out so one of the best ways to combat falling into debt due to moving out is to make sure you are fully prepared both financially and mentally before taking the leap and going solo.

9) Utility Bills

Utility bills are often overlooked by home owners until it’s too late and they are in debt. This usually happens during peak winter and summer seasons when there is more gas and electric being used due to the boost in colder or warmer weather.

If you’re struggling to pay your utility bills the first thing you should do is get in contact with your supplier and explain your situation to them. Believe it or not, their on your side here because they rather have you paying them as oppose to them spending their time and energy chasing you around for money they may never get. By doing so, your energy supplier may put you on a repayment plan so you don’t have to pay off huge lump sums of cash at once, instead they will be spaced out weekly or monthly and will cover some of your current usage as well as some of your debt.

There are also government schemes like the Warm Home Discount which are designed to help the vulnerable or those who may struggle to cover the cost of their bills during the winter months. Be sure to check if you’re eligible for this.

Finally, it is recommend that you check out websites like Uswitch to see if you can get better rates for your gas and electric.

How can Housebuyers4u Help you Get out of Debt and Move Forward with your Life?

Financial issues are sadly a regular occurrence these days and many people are going through them on a daily basis. The stress of being in debt can be very exhausting and is often the cause of many other unwanted problems for people. If you need to sell your house because of financial difficulties, here’s how Housebuyers4u can help.

We here at HB4U specialise in helping people who are in financial difficulties to sell their homes fast and get on with their lives.

We are genuine cash home buyers who will buy your house in any condition regardless of what situation the seller is in. So whether you’re in mortgage arrears, stuck in a property chain or have a ‘problem property’ we can help.

So are you interested in a quick house sale? Get in touch with us today for your free no obligation cash offer!