Are you a Scrooge or a splurger … or both?

champagneWhen I launched the second edition of my book Back to the Black … how to become debt-free and stay that way, we had a party. The subject of debt is serious, of course, so we felt a little frivolity would be good. The party – sorry, launch event – was chaired by my good friend, the author and journalist Debbie Young, and she came up with a great idea to get everyone involved.

It seems that many of us save money by making small economies on necessities – ‘Scrooging’ – but then immediately blow much larger amounts on luxuries – ‘Splurging’.

So we invited our audience members to give examples of how they’d done exactly that. Nearly all of them were happy to accept the challenge.


 Our question was this: “please share your best money-saving tip … and then confess your worst extravagance.”

Here are the answers we got:

  • “Looking for the double-points deals at Tesco … but then using a store card (with an APR of over 30%) to buy clothes.”
  • “Buying at charity shops or getting stuff from Freecycle … but then buying a piano when I didn’t have anywhere to put it.”
  • “Buying most of our food (and all of our drink) at Aldi … but then buying a BMW for my business.”
  • “Using a ‘My Waitrose’ loyalty card to claim a free coffee and newspaper if spending more than £10 at the weekend … but then spending far more than that £10 minimum.”
  • “Going to the M&S bakery after 6pm to stock up on reduced bread and cakes to freeze for later … but then staying overnight at the Waldorf Astoria to attend a wedding, when I could have stayed at the Travelodge.”
  • “Refusing to pay £1 for a bus-fare, even in the rain … but owning several pairs of shoes that cost more than £150 each.”
  • “Calculating the total cost of credit before buying anything on a card … … but then buying a new motorbike.”

These were all good; but the winning entry on the night of the launch combined a Scrooge and a Splurge in one short and elegant phrase:

“Champagne with out-of-date food.”

We thought that deserved a prize.


The launch event at which this fun idea was kicked around was for the second edition of Back to the Black. It was held at the Bristol branch of Foyles’ bookstore.

We offered a prize for the best Scrooge & Splurge idea. In keeping with the theme, it was a toy car … a Bentley, of course. Also in keeping, the drinks and nibbles  were all sourced from the aforementioned Aldi. (For readers who are not UK-based, that’s a German-owned budget supermarket.)


Scrooging and Splurging, even within minutes of each other, is very understandable. I do it myself. But I know that there would have been no point in extricating myself from a debt crisis (which I did in the late ‘90s, as I relate in Back to the Black) would have been pointless if I’d then got back into debt. So I have to be sure that my Scrooge incidents outnumber the Splurge incidents.

“Scrooging and Splurging” could also be expressed as “enjoying life, while keeping the finances in order”. This and many related topics will be featured in my next personal finance book.

Its working title is Staying in the Black and I plan to launch it by the end of the year.


Back to the Black … how to become debt-free and stay that way is available to order at all good bookshops.

Both Kindle and paperback editions are also available on Amazon:






A recent story from “This is Money” surprised me; but I can see now that it should not have been a surprise.

Here’s a summary:


According to debt advice charity Stepwise, the effect of rising living costs is pushing more and more over-60s into debt. The numbers in the report were pretty dramatic.

The number of over-60s who contacted them for debt advice had increased by 39% from 2009 to 2012.

And in 2012 the average debt of those over-60s was higher than any other age group.

For example, on credit card debt alone, the over-60s had average debts of about £15,000, which was 50% higher than the average of all age groups.

StepChange’s director Delroy Corinaldi talked of a key reason: that those in this age group who are struggling with debt are particularly vulnerable, as their earning potential has diminished’

Another explanation: age campaigners have complained that ‘rises in living costs hit older people harder because they spend a greater slice of their income of everyday essentials such as food, heating and electricity. These have risen in price more quickly than the overall rate of inflation.’



The facts speak for themselves. And the explanation is totally logical.

The “living costs” part of the explanation was emphasised in a recent article from “Investment News”, the monthly magazine of the investment supermarket Hargreaves Lansdown. I’ll cover that in a future post.



 Here it is!



By ED MONK, This is Money

Published 9 May 2013

Levels of credit card debt are higher among the over-60s than the population as a whole and increasing numbers are resorting to debt advice, a debt charity has reported.

The alarming warning contradicts the stereotype of younger people being the most indebted and highlights the financial difficulty many older people are suffering even after they retire and are unable to easily boost their earnings.

It comes as another charity, Age UK, launched a campaign today to ensure older people claim all state benefits owed to them to alleviate rising living costs. (See below).

Age old problem: Over-60s looking for debt advice have more on credit cards than younger people.

StepChange, the debt advice charity, reported that the over-60s clients that it advises have average debts of £22,999 each, versus an average of £17,635 across all clients. The figures relate to unsecured debt and do not include mortgages.

It is credit card debts that are weighing most heavily on older people. StepChange clients above the age of 60 had an average £15,152 of credit card debt, versus £10,006 for all age groups.

(that’s 50% higher! – Ed.)

The same trend is evident for catalogue debt – £2,026 for the over 60s compared to £1,808 for all age groups – overdrafts – £2,467 compared to £2,026 – and store cards – £2,005 compared to £1,196.

Step Change said that 13,148 people over 60 contacted it for advice last year, up 39 per cent from 9,628 in 2009.

Delroy Corinaldi from StepChange said: ‘Whatever someone’s income level during their working years, most would expect to be in a stable, if not comfortable, financial situation when they are older. Unfortunately those in this age group who are struggling with debt are particularly vulnerable as their earning potential has diminished.’

One possible explanation for the trend may be that older people are unable to easily increase their income, meaning that any debt they have when they stop work becomes unsustainable more quickly than for working people, pushing them to seek advice sooner.

Additionally, this generation had access to higher levels of borrowing prior to the credit crunch.

Age campaigners have complained that rises in living costs hit older people far harder because they spend a greater slice of their income of everyday essentials such as food, heating and electricity. These have risen in price more quickly than the overall rate of inflation, currently just 2.8 per cent.

Charity Age UK reported today that almost a third, 32 per cent, of older people admit to struggling financially, with more than half, 56 per cent, worried about basic living costs such as buying food and keeping warm.

Age UK said that its research showed a third of older people are feeling financially worse off than this time last year, a quarter admitted they had cut back on luxuries and a fifth said they had bought cheaper or less food.

One in five had cut back on heating their home this winter

The charity has launched a campaign to encourage older people to claim all the state benefits they are entitled to. The campaign is being backed by high-profile money saving expert Martin Lewis.

Despite over four million pensioners being entitled to pension credit, Age UK said, a third of those who are eligible don’t claim it. Yet if all those who are entitled to Pension Credit put in a claim, it could boost their income by an average of £1,716 a year.

Michelle Mitchell, Age UK’s Charity Director, commented: ‘At a time when so many people are struggling financially, it is a huge concern that vital benefits are failing to reach some of the poorest and most vulnerable older people in our society. This is money that could make a real difference to their quality of life.’

The call is at odds with Government noises that wealthy pensioners should give up universally available benefits such as the Winter Fuel Payment and free TV licences.

Age UK has just published a new guide – ‘More Money in Your Pocket’  – to help older people claim the benefits they are entitled to. To order the booklet, call Age UK Advice free on 0800 169 65 65 or visit, where there is an online benefits calculator to show what extra support may be claimed.




1. The debt advice charity StepChange was previously known as Consumer Credit Counselling Service.

2. For more articles on personal finance from “This is Money,” go to

3. For information about my book “Back to the Black: how to become debt-free and stay that way”, click HERE.

Photo Credit: Public Places via Compfight cc

WHICH DEBT SHOULD I PAY DOWN FIRST? Free “snowball” program works it out for you.

There are various ways of calculating how to pay off your debts; and one of them is called the ‘snowball’ method.  I first heard about it on Martin Lewis’ ‘Money Saving Expert’ site.

I was looking for a version to post here; and I saw a version on a site called ‘Living Today Forward’. The site says of snowballing: “This simple methodology was popularized in the US by Dave Ramsey. His strategy focuses on the behavioural part of personal finance, delivering quick wins by paying off smaller debts first and tackling larger debts once you’ve established some momentum.  To get started, all you need to do is list your debts, sort them from smallest to largest balance, and start tracking your progress.

To that end, we are very pleased to offer you a free, downloadable debt snowball spreadsheet in Excel format.  On the worksheet, you will find comprehensive instructions and a simple layout that is easy to follow.  This can be expanded to track your entire debt payoff experience and can also serve as a powerful reminder so you can avoid adding more debt to your life.”


There’s a link below if you’d like to try that one. However, when I see Excel spreadsheets my brain hurts. So I found another version of the snowball that I particularly liked, on a UK site called ‘What’s the Cost?’

The idea of this site – and again I quote – is “to build a number of free, easy to use, on-line calculators to help you calculate the cost of various financial products such as loans, credit cards and mortgages. Rather than going to a debt management company, or consolidating your loans, this site contains financial tools to help you get debt free yourself!

“You’ll find tools here to help calculate the real cost of loans, the real cost of borrowing on credit cards, how much you could save by overpaying on your mortgage and more.

If you want to find out how much your loan or credit card is costing you, click on the link. This will allow you to enter your debt details and see a full breakdown of your estimated payment details.”

The calculators on the ‘What’s the Cost?’ site seem to be very user-friendly. The site has several; I tried out the one called ‘debt reduction’. It takes account of the fact that on some debts your monthly payment is fixed, whereas on others it’s your decision. The calculator gives you the optimum overall solution, which it will compute based on the data you enter, from up to 20 different debts.

However, before you use it, you need to make an important decision. How much of your spare cash (or ‘discretionary income’, as we say in the trade) are you going to use per month to pay down debt? How much of it will you use for non-essential expenditure … and how much for debt repayment?



1. Here’s a download LINK to the Excel spreadsheet from the ‘Living Today Forward’ site.

2. Here’s a LINK to the snowball program (my personal favourite) from the ‘What’s the Cost?’ site.

3. Here’s a LINK for info about my book ‘Back to the Black: how to become debt-free and stay that way.’


A recent report by the debt advice charity StepChange points up two main issues:

  • Regional variations in debt burden
  • The special risks for self-employed people.

There are bound to be regional variations in almost anything. What was notable, though, is that the region where people are spending the highest proportion (30%) of their disposable income on debt interest payments, is the South East.

However, the section in the summary that hit me in the face was this:

“Self-employed struggling: partly because of high levels of secured borrowing – possibly taken out to keep businesses afloat – self-employed people advised by the charity owed on average £300,000.

“Clients in part-time or full-time employment had an average debt load of 4.1 times their income. For self-employed people this rises to 18.6 times their income.”

[Note: The figures apply to debtors who are or were clients of the charity. They are not necessarily typical of the population as a whole.]

The difference between 4.1 and 18.6 is remarkable; and I can empathise, because I was in the same situation fifteen years ago. I had a business that had done well for five or more years but then “fell on hard times”, to put it euphemistically. Like the clients of StepChange, I increased my borrowings (secured or unsecured, they were still debts) in an attempt to keep the business afloat. By the time I decided that would not work, closed the business and concentrated 100% on solving the debt problem, my total borrowings were several times my income. Not eighteen times, but a lot.

How I solved the problem is told in my book “Back the Black: how to become debt-free and stay that way.” (Amazon: paperback and Kindle eBook)


For a copy of the report by StepChange:



Previously, on this blog …

I had an American colleague who, every year, had major fights with his boss to negotiate more realistic (i.e. lower) sales targets. “I decided,” said Carl, “that I’d rather have a fight once a year at target-setting time, than have a fight every month-end.” In other words he managed his boss’s expectations downwards. That is fine for creating and managing the expectations of your boss or, dare I say it, your clients. But in managing your own expectations – and those of others with whom you interact while you are dealing with your debts – I hope you’ll agree with me that positive expectations are the way to go.



Creating your own space

The celebrated and late-lamented Spanish golfer Seve Ballesteros told a wonderful story about how he developed a technique to protect himself from the negative thoughts of others, a technique that you might find useful in this as in other challenges in your life. “I realised that when I played an important match, all the other golfers, all their back-up teams and families all wanted me to play badly. I became so aware of these negative thoughts that it began to affect my game.”

What did Seve do? Simple; he decided to carry a bubble around with him. “Every time I stepped up to hit a shot, I imagined that I was stepping into a large bubble. Once inside, I was protected against the negative wishes of others”.

Could you borrow something from Seve’s idea? At certain points in your debt-management process, you will almost certainly be bombarded with payment reminders, final demands and the full panoply of the financial services industry’s “collection services”. You may even receive these communications as frequently as the offers of new credit cards and increased credit limits that you used to receive in the past – until the credit crunch and until the lenders realised that you had finally made the decision “enough is enough” and had decided to reduce your debts rather than routinely “revolving” them. By the way, did you know that the card company might have actually called you just that? Someone who only pays the minimum amount each month is called a “revolver”. If that’s what you did, you were exactly the client group they targeted. But that was then. You know better now.

The bell-jar

Maybe Seve’s bubble idea doesn’t work for you, so here’s a modification. Jack Black, the wise and witty Scottish author and trainer, has upgraded Seve’s bubble and he carries around an imaginary bell-jar. Any potentially stressful situation and he says to himself, “Bell-jar …ON!!” and then the slings and arrows of outrageous fortune cannot harm him.

If, on the other hand, you are the kind of logical, “left-brain” kind of person who would find the idea of personal bubbles or bell-jars – virtual or not – too off-the wall, here’s a practical strategy that can achieve the same results.

Negotiate in writing, not by telephone

In order to create space between you and your creditors, I recommend that you conduct your negotiations in writing only. There are all kinds of benefits here:

  • You have time to think before responding.
  • It will look professional; if you are not good at composing letters, there are some examples in the “resources” section of my book (see below for link), which you can adapt to fit your situation; or you can get an adviser to help.
  • You have a record of everything that has been said by both parties.
  • … and most importantly, it is less stressful.

“Let the answering machine take the strain”.

Follow this strategy, summon up your reserves of patience and persistence, and the huge benefit is that you avoid verbal discussions. They are just too stressful right now and, thanks to that wonderful invention the telephone answering machine, you need never speak to a creditor in person.


To be continued …

The above is an extract from Chapter 2 (“Mind Over Matter”) of “Back to the Black: how to become debt-free and stay that way”. [LINK]


The paperback version of my book “Back to the Black: how to become debt-free and stay that way” is now available on

It encapsulates what I learned from my own debt problem a few years ago, when I very nearly had to file for bankruptcy but found another way.

Hopefully the lessons I learned are set out in such a way as to help others who might now be in the same situation as I was.

The marketing material reads as follows:

  • Worried about debt? This book shows how to handle stress, to optimise your repayment schedule; to budget and track spending. 
  • You’ll feel confident of your ability to handle the debt and will have a plan for doing so. You’ll learn to evaluate today’s situation and decide realistic goals; to develop options and calculate discretionary income. 
  • Armed with that information, decisions will seem easier.

 You can also find a kindle version on Amazon; a .pdf version on my own site: and other e-formats in the Smashwords store.


For the paperback version of “Back to the Black”: LINK

For the ebook versions:

Smashwords, for a multi-format ebook: LINK

Kindle store: LINK

For .pdf only: LINK


Most financial experts say that it’s important to maintain a good credit rating, even if you are not planning to increase your borrowings in the near future. At some point in the future you may well want to do so; at that point, if your credit rating is poor, or simply inaccurate or out-of-date, it could cause you problems. At the very least it could cause you delays.

As I have mentioned before, I subscribe to “Moneywise” magazine and I find it a useful resource. It’s also a quick read, which is very important to many people. I wish I had known about it back in the late ‘90s when I faced my own debt problems. Being in debt is stressful and that’s why very often advice needs to be clear and succinct.

This month’s issue of the magazine contains a helpful article on the very question of boosting your credit rating. The article is not available yet on the Moneywise website, so you’ll have to buy the magazine to read the full piece. (March 2012, page 44; good value, I’d say, at £3.95)

To summarise:

  1. Get hold of your credit report from one of the three main credit reporting agencies in the UK: Experian, Call Credit and Equifax. They are required by law to provide a basic one for £2.
  2. Look for mistakes; lenders often misreport and still show debts as being unsatisfied, even though they have been paid in full.
  3. Check for old addresses: are your old addresses in there? Are they spelled correctly? You need evidence of your past payment performance.
  4. Check for hidden debts: balances that had built up of which you were unaware. (e.g. forgotten direct debits on unused accounts)
  5. Show your stability. Long relationship with one bank? Landline phone? On electoral roll?
  6. Cancel unused credit cards, debts, accounts. (I myself need to look at this; I have several cards I never use)
  7. Get a credit card, if you haven’t got one. This seems illogical but it’s a good strategy. Manage it sensibly; that provides evidence of your “probity”.
  8. Be careful who you link your finances to. Applying for joint credit will link your credit reports, of course.
  9. Don’t make lots of applications for credit at the same time.
  10. The Golden Rule: don’t miss payments. If you can’t avoid missing one, contact the lender / credit card company in advance; don’t just default.



Way back in 2004 I found a great online resource on this subject from Equifax. That’s really “from the horse’s mouth”, because they are one of the three UK companies mentioned above, who do the credit reporting. The information is still valid and it’s still on Equifax’s website.

The title was “Rebuilding Damaged Credit”. Some of the advice overlaps with that of “Moneywise”, some not.  Here’s a summary of it:

Open new accounts … and pay them off

Being able to repay a variety of new accounts helps rebuild your credit. Opening and paying off as many different kinds of accounts as you can is better than adding more debt to an existing credit card.

 Start small

Rebuilding your credit can be similar to starting over from scratch; starting small may be the easiest option. Credit cards from department stores can be useful. (Warning: if you don’t pay the full balance every month, their interest rates tend to be among the highest)

 Consider asking for help

If you can’t qualify on your own, ask a friend or family member to co-sign for a small loan or credit card.

 Consider a secured credit card

They are guaranteed by a deposit that you make with the credit grantor; they offer the purchasing power of a major credit card. Make sure the grantor reports payment histories to a credit reference agency, so you’re building your positive payment history.

 Use new accounts in moderation

And make payments that are more than the minimum.

 Keep balances low

Avoid carrying a balance that is more than 30% of your credit limit, because creditors may view that as excessive debt.

 The bottom line

 It’ll take time for your new credit history to gain momentum, so be patient. You’re demonstrating your financial reliability; that’s why opening and paying down accounts may make it a little easier to get more credit in the future if you need it.



For the resources mentioned above:

For the Equifax resource in full:

For a short “Moneywise” video on improving credit rating:

For the article: “Ten ways to boost your credit rating”. Available in “Moneywise”, March 2012, page 46.


For info and links re my e-book “Back to the Black: how to become debt-free and stay that way”, click HERE.

It’ll also be available in paperback from Amazon in a couple of weeks; I have the proof copy in my hand right now.