DX6516_2905414b[1]“The amount UK consumers owe on loans and credit cards grew by £1.9bn in March 2016, the highest figure in 11 years, driven by a sharp rise in spending on plastic.”    (The Guardian)

If personal debt really is increasing again at a worrying rate, then a growing number of people could soon be facing the stress of a debt crisis.

For anyone facing this kind of problem, debt advisers might say things like this:

  • Don’t ignore the situation. Open the demand letters, make a list of the balances.
  • Always respond to every communication from a creditor. That shows you’re serious about dealing with the situation.
  • Make an offer. Explain if you can’t offer more.

To those basic steps, I’d add another:

  • Always communicate in writing. You’ll have a record of what was said and agreed; and it’s less stressful than dealing with creditors on the phone.

Avoid the phone

Many years ago I was in that situation, when my small business failed and I owed money to 26 creditors. Negotiating with all of them took a long time but eventually I came through it without permanent scars on my sanity (as far as I know).

I always negotiated in writing, never on the phone.

Dealing with a creditor on the telephone is stressful. My voicemail took a lot of the strain (what a great invention, whether you have an actual machine or a service from your phone provider) but if a creditor left a message I always responded … in writing.


One of the complications that I occasionally encountered was the involvement of intermediaries. Some were bogus law firms which were actually departments of the creditor company, with stationery designed to give the impression of being a genuine law firm, in order to intimidate.

When dealing with intermediaries of any kind, I was always extra-polite, working on the assumption that they hadn’t been fully informed, so I would write things like: “maybe you don’t know, but in the letter of so-and-so from your client …” and I’d enclose or attach a copy of the previous correspondence.

Not keen on writing letters? Help is available!

You might say that writing letters (or emails) is not your strong point. That’s no problem, because lots of debt management organisations can help you. For example, here in the UK, Citizens Advice Bureaux are all over the country and their advice is free and impartial. They helped me greatly. The other major nationwide debt advice charities are StepChange and National Debtline. There are also many local not-for-profit advice providers: for example in Bristol, where I live, there’s Talking Money. There’ll be one near you.

Buying time: it helps your negotiation

The other benefit of working with one of the debt advice charities, or any adviser, is that it creates a little distance between you and the creditor and it buys you some time. So, if a creditor calls you rejecting your offer and gives you a counter-proposal, you can say (politely, of course!) “thank you; but could you put that in writing, please, because I have to refer it to my advisers.”

Letter templates

Templates for standard letters / emails are available from some of the organisations I mentioned above. You can also find templates in my book Back to the Black.

Want to know more?

This article is an extract from my book Back to the Black … how to become debt-free and stay that way.


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.’


In my book “Back to the Black”, I talk about the psychological effects of being in debt. In fact Chapter 2 is entitled “Mind Over Matter.”

I was pleased to see that this important issue was covered in a recent article by Simon Read in “The Independent” (17 March 2012). I’ll take the liberty of paraphrasing:


Being in debt is a depressing experience.

“A trouble shared is a trouble halved”; but the annual report of Consumer Credit Counselling Service (CCCS) shows 25% of those in debt don’t share their troubles with friends or family.

It’s understandable that people don’t want to discuss their debt problems. They’re embarrassed that they might be judged.

Admit the problem; don’t delay

However, admitting you’re in financial trouble is the first step towards solving the problem.

CCCS also revealed that 45 per cent of people delayed seeking advice for more than a year after they started to worry they had a debt problem. Many of them had probably carried the worry alone.


Many tragic suicides are caused by the worry of debt (and for every suicide there are ten attempted suicides). If those people had been able to talk about their problems, who knows what kind of future they may have had?

Talk to someone

Don’t just worry about debt. Instead look for a way to deal with it. There are many people and organisations that can help.

Help is at hand

CCCS (and the other debt advice charities: see below) are on hand to help.

All of them can help those in debt find ways to put their finances back on track.

Friends and family

Just talking to friends and family could be a good first step on the way to coping with the deep anxiety that money worries cause.


I had intended to add some thoughts of my own to this; but I think that the article says what needs to be said. I’ve just added information about organisations that can help; see below.






Citizens Advice (“The CAB”)

 Free advice provider; registered charity. Funders include central and local government, charitable trusts, companies and individuals.

Face-to-face interviews and telephone advice available at local Citizens Advice Bureaux (CABs). Find your nearest bureau in the phone directory, or search at

E-mail advice available at some CABs

Advice line: 0844 499 4718

Online help also available:

CCCS (Consumer Credit Counselling Service)

Free advice provider; registered charity. Supported almost entirely by the credit industry.

Telephone counselling 0800 138 1111

Online help

National Debtline

 Free advice provider; registered charity. Part of the Money Advice Trust, (see below) funded by a mix of private sector donations and Government grants.

Phone advice and free factsheet orders: 0808 808 4000

Credit Action

Money education charity, in partnership with CCCS (see above). Free online advice provider, plus the Spendometer (see Chapter 8), Money Manuals and other resources:

Their “Money Advice Map” signposts to local debt advice centres:






AdviceUK (to find a local money advice centre)

020 7407 4070


Debtors Anonymous (worldwide community with telephone & online meetings)

… and to find contact details for local meetings inUK:


Mind (charity & helpline that helps with mental health problems)

0845 7660 163


Samaritans (confidential emotional support)

0845 790 9090


Saneline (support for mental illness)

0845 767 8000


Shelter (free housing advice helpline)

0808 800 4444


For the “Independent” article in full: LINK


For info about my book “Back to the Black: how to become debt-free and stay that way” (paperback and eBook): 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


When I first started to plan and write my own book on debt (“Back to the Black” – see below) I naturally trawled the bookshops to skim, then buy and read, other books on the topic. I wanted to find out to what extent the subject had already been covered.  Was it worth writing another book, or had the subject been done to death already?


I found, to my surprise, that there were very few books on how to deal with personal debt problems. I bought and read most of them, because I didn’t want my book simply to rehash what had already been said. When I say there were very few books, I mean print books by British authors on the shelves of British bookshops. Of course there are far fewer British bookshops nowadays, but that’s another story.


I then found there were a few more that were only available as e-books, which is the way I decided to publish first. What I also found was that there were many, many more e-books by US authors. Of course that’s a bigger market (population five times higher) but there must be other reasons for the difference because it’s out of all proportion to that ratio. When I’ve figured it out I shall get back to the question in another post.


All that was a couple of years ago. Sitting on my desk today is a more recent addition to the market and I think it’s a valuable one. Its remit is wider than mine, which was simply about debt and how to handle it.

Sanni Kruger is a financial coach. She runs the local (Bristol, UK) branch of Debtors Anonymous and she’s published “Making Friends With Money: how to start feeling wealthy without waiting till you’re rich.” As the title suggests, her message is that it’s not just a matter of how much money you have; it’s also about attitude, about mind-set. Her chapter headings give a flavour of the content: feeling better about money; getting a grip on your finances; using cashflow planning to build your wealth; getting on top of debt; cashflow management from day to day; surviving the money jungle; the light at the end of the tunnel; and finally: achieving what really matters to YOU.


Ms Kruger’s background is in book-keeping and accounting, so it’s no surprise that there is plenty of detail here about budgeting and cashflow planning. That’s a subject that is a challenge for many people, including me. Perhaps it should be taught in schools but that’s another question. The coverage of this subject is sound, as you’d expect. However, the advice I liked best in this section of the book was to have two bank accounts; one main one which was simply and in-and-out vehicle for one’s regular / predictable income (be it wages or salary, benefits, pensions etc) and one’s committed / predictable expenditures, which should exit via direct debits; then you work out what’s left after the regular / committed expenditures and transfer that amount to the second account, which Ms Kruger calls the “D2D” (Day-to-Day) account. That way you get a better handle on how much you have available for discretionary purchases and for any expenditure which is regular but variable if you get my drift, e.g. food shopping. Keeping an eye on the balance in the D2D account tells me when I ought to go to Lidl / Aldi and when I could afford an occasional splurge at Waitrose.


That was very useful but in the last few chapters the book gets more into the bigger picture, or longer-term goals; right-brain thinking or whatever you want to call it. I liked the final chapter on “achieving what really matters to YOU” (Ms Kruger’s capitalisation) because that includes a kind of “hierarchy of needs” approach as it applies to money. To take as an example the specific area my book covers, she suggests these levels of debt repayment:

Level 1: nothing can be repaid

Level 2: more than zero, i.e. £1+ per month: (Ms Kruger, like me, knows that paying £1 / month to every creditor still has value)

Level 3: More than £25 / month to each creditor

Level 4: More than £200 / month to each creditor

Level 5: no debt to repay – ever again.

OK, the numbers will vary according to each person’s circumstance but the principle of working one’s way up the different levels seems good to me. Similarly on transport, she suggests that one might visualise progress (“a journey”, as they say)  from Level 1: “enough money for public transport; lifts from friends”; to Level 5: “new car of my dreams and the money for running costs etc etc, plus enough money in car replacement fund to change it at least every 2 years; public transport (first class) or taxis when desired.”

As you might guess from this section, the book closes with a further section entitled “living your dream.” Lots of other self-help books talk about that topic but Ms Kruger’s book gives people the practical tools to achieve it and the mindset to start feeling wealthy even before you become rich. Just as it says on the tin; or in the subtitle anyway. A worthwhile read.



On Sanni Kruger’s book “Making friends with money: how to start feeling wealthy without waiting till you’re rich”

Go to to order. Hard copy (comb-bound A4) £12; downloadable .pdf £7.20, or in four sections each £1.99

On my own book about managing debt, “Back to the Black: how to become debt-free and stay that way”.

eBook only. To sample for free, or purchase (all versions around £0.70 / $0.99):

  • Available in the Kindle store; click HERE:
  • Available in all e-formats, including .pdf, at Smashwords. Click HERE:


A while back I wrote about “peer -to-peer” lenders, which were starting to be popular with both investors and borrowers, although their market penetration is so far small. The best-known one in the UK is Zopa, at least for personal borrowers.
According to an article by Lucy Warwick-Ching in the Financial Times, there is now a new one, focussing on lending to small businesses. Here’s an extract from that article, with my comments. See below to reference it in full from the FT site.

What’s the deal? is an online peer-to-peer lending service enabling investors to make loans to direct to businesses.

Businesses seeking funding pay a listing fee of £450 to upload their information. Potential lenders decide whether to participate in an auction to lend to that company. (Kind of Dragon’s Den, eh? Ed.) If they do, they set the interest rate and the amount they’ll offer. A syndicate is made up of the bidders offering the lowest rates.

The minimum bid is £1,000, but the most common loan is around £5,000. (Clearly for pretty small businesses: Ed.)

Is this good?

With ThinCats, lenders set their own interest rates. Some have achieved rates of 15 per cent in recent months, but 8 per cent to 11 per cent is more likely as the marketplace for these loans matures.

Lenders are not charged a fee and it is up to ThinCats to chase any outstanding payments. (This is a USP, if it works: Ed.)

What’s the catch?

The company is young, so it doesn’t have much of a track record. Loans are secured (key info! Ed.); if a business falls behind with payments, ThinCats would call in the loan security. But investors’ money is not as secure as it would be in a bank account.

What’s the alternative?

ThinCats follows on from the success of other peer-to-peer lending sites such as and; but it is the first to offer secured loans.

(and the first, as far as I know, to target small businesses in search of funding, as distinct from individuals: Ed.)


Peer-to peer lending

Link to reference the article

“Back to the Black”: my eBook on managing debt

To sample or purchase this debt advice book (£0.70 / $0.99):


This month’s edition of the “Moneywise” magazine carries a supplement showing all the winners (and losers!) in their annual awards for service and trustworthiness. At a time when banks, and the financial services industry in general, have had many knocks to their corporate reputations, any good news is good news, if that makes sense.

Here is my totally unscientific extract, i.e. the awards that interested me most. And don’t worry, if you don’t subscribe to Moneywise (which is very good value; and I am not on commission!) you can access the info online; scroll down for the link.

In summary: First Direct dominated the awards, winning many categories. There were also awards for several organisations I’ve mentioned on this blog: Zopa, Yorkshire BS and Coventry BS.


Current account provider:

Winner: Smile. Highly Commended: First Direct. Trusted Providers: Clydesdale Bank, The Co-operative Bank, Nationwide, Yorkshire Bank

Credit card provider:

Winner: First Direct. Highly Commended: John Lewis. Trusted providers: Co-op Bank, M&S Money, Nationwide, Tesco Bank

Mortgage provider:

Winner: First Direct. Highly Commended: Coventry Building Soc. Trusted providers: Britannia, C&G, HSBC, Nationwide

Savings provider:

Winner: First Direct. Highly Commended: Coventry Building Society. Trusted providers: Britannia, Nationwide, Post Office, Yorkshire Building Society.

Personal loan provider:

Winner: Zopa. Highly Commended: First Direct. Trusted providers: Nationwide, NatWest, Sainsbury’s Bank, Tesco Bank

Overall “most trusted” provider: First Direct. Highly Commended: Nationwide.


In addition to the “most trusted” awards, there are also six service awards in each of 15 categories: go to the link below for details.


The magazine also named and shamed the outfits with the worst record. Sadly, out of seven categories, Santander came out worst in five and worst equal (with Halifax) in a sixth.  Moneywise got an interview and an apology from Steve Williams (Santander’s Director of Service Quality, not the Bristol West MP of the same name)



Awards details

For the full lists of all the Moneywise awards (winners, Highly Commended and shortlists / “trusted providers”) in all categories, with info on the survey’s  methodology; plus contact details for the companies they endorse (but not for those they name and shame!), go to: LINK

“Back to the Black”: my eBook on managing debt

To sample or purchase this debt advice book (£0.70 / $0.99):


My thanks to the charity Credit Action for their latest credit data.

Previously, on my blog …

The last time I blogged about this, I reported that the “write-off rate” on consumer lending by UK monetary financial institutions to individuals increased further in the second quarter 2010 to 7.4%. In that quarter, UK banks and building societies wrote off £3.47bn, most of which was credit card debt.
Secondly, Credit Action reported that average household debt in the UK was £8,590 (excluding mortgages). They went on to say that “this figure increases to £17,896 if the average is based on the number of households who actually have some form of unsecured loan.”

That second statement puzzles me; I don’t agree with the idea of giving a second average that includes only those who have debts. An average is an average, including the highs and the lows and everything in between. If we exclude those with the very lowest debts (i.e. zero), then we should also exclude all those with the very highest debts, i.e. all of the “outliers”.

By the way, if one included mortgage debt, then average household debt in the UK was then about £56,690.

The report concluded that total UK personal debt at the end of August 2010 stood at £1,428bn, a slight increase.

Now for the update

The latest Credit Action report, which I received last week, still gives the second-quarter figure for the write-off rate on consumer lending, i.e. 7.4%; presumably the third-quarter figure is not yet available.

Total lending in September 2010 rose by £0.4bn; secured lending increased by £0.1bn in the month; consumer credit lending increased but only by £0.3bn. (a step-change from pre-recession days: total lending in Jan 2008 grew by £8.4bn)

Total consumer credit lending to individuals at the end of September 2010 was £216bn. The annual growth rate of consumer credit increased 0.3% to 0.6%.

Average household debt in the UK is ~ £8,562 (excluding mortgages). Again, they add, “this figure increases to £17,838 if the average is based on the number of households who actually have some form of unsecured loan.” Again, I find that second figure rather artificial.

Total average household debt in the UK (including mortgages) is approx £57,737; that’s an increase but only a very small one.

Your debt or the country’s debt?

If you thought that figure was highish, the report goes on to say that “if you add to this the March 2010 budget report figure for public sector net debt (PSND) expected in 2015-16 (excluding financial interventions) then this figure rises to £109,960 per household.” Sorry, but that is rather a jump of logic; the PSND is not my personal responsibility, although I would indeed be worried if I thought Mr Osborne would send the bailiffs round to ensure I cough up my share of the UK debt. Thus I feel this excellent report is slightly compromised by making the raw data appear worse through this addition.

And another thing … that last calculation is based not on current government borrowing but the projection for 2015-16; a lot can happen before then. “Things can only get better”, as the song says; at least I hope they will. Let’s hope, in particular, that the PSND in five years is lower than that prediction.

Back to the present

Finally, and if we deal solely in current and personal realities, total UK personal debt at the end of September 2010 stood at £1,455bn; as you can see, that’s a further slight increase. Based on their latest report, the people at Credit Action can still make the same statement that I quoted in my book “Back to the Black”. In their words: “Individuals owe more than what the whole country produces in a year.”
It is sincerely to be hoped that this worrying statement will be short-lived, and that GDP will continue to rise and personal indebtedness will start to fall.

To find out more about my new book “Back to the Black: how to become debt-free and stay that way”, go to


Yesterday I was spending an evening with friends when one of them said he’d just started to read the free edition of “Back To The Black”. I asked what he thought of it so far and he said what friends do, that he liked it. However, he said, there was one thing missing. Naturally, I wanted to know what was missing.

The bit where you advise people to work out how much they can afford to spend … and then spend a little less.”

Barry was right; I hadn’t specifically advised people to do that. However, I had instead quoted the dictum of Mr Micawber. In case you’re not a fan of Dickens, Mr Micawber was a character from “David Copperfield”, who famously said, “Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and sixpence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds, ought and six, result misery.”

My friend is a very well-read guy but the message was that I should perhaps have been a little more direct with the advice.


When I was doing that second radio interview with Heart FM earlier this week, an instructive fact about the state of our economy cropped up.

I was talking to Heart’s Rob Mayor about the necessity for Brits with debt problems to get tailored and impartial advice, preferably from one of our excellent independent advice organisations within the charity / voluntary sector. The best-known examples at the national level are probably CAB (Citizens Advice), CCCS (Consumer Credit Counselling Service) and National Debtline. I also said that a face-to-face interview was better than a phone helpline, especially for anyone starting to get to grips with the problem for the first time.

However, just before we started to record the interview, I had a call from Citizens Advice in response to an earlier enquiry of mine. As Rob and I had just been talking about the recession, I asked my CAB contact what was their current waiting time for a face-to-face debt advice interview. The answer was 3 – 4 weeks; longer than usual and a sign that the effects of the recession will be with us for quite a while yet. Phone help is, of course, available a lot more quickly.