It pays to talk about debt

14 January 2008

"Better to remain silent and be thought a fool than to speak and remove all doubt."

We might not put it in those words, but we all know what it means – when we’re embarrassed about something, the last thing we want to do is share it with other people!

Sometimes, however, it is better to speak up. If we keep quiet about a problem, we won’t receive any help or advice from people who`ve dealt with similar difficulties in the past. Take money: whatever financial problems we`re dealing with, we won’t be the first. All kinds of people have been in (or helped people in) situations like the ones we’re facing, and there’s a lot we could learn from them.

So why don`t we talk about our finances? When fool.co.uk asked people about their attitude to money, they found that 66% saw it as a personal subject which should be kept private, and 30% felt that talking about money was actually rude.

"If the UK was full of people with fat bank balances and thin credit card statements, " says a spokesperson for Gregory Pennington, "that might not be a problem. Unfortunately, that isn’t the case."

Price comparison site uSwitch reports that almost 10 million UK residents see their borrowing as unmanageable. So why are`t we talking?

"First of all, there’s the `ostrich` factor. When we face up to our debts, we`re forced to admit that they’re real and they aren’t going to go away by themselves. Maybe that’s why more than two and a half million people in the UK don’t even know how big their debts are, according to a report by unbiased.co.uk. Until we admit our financial problems to ourselves, there’s no way we can talk to other people about them."

"Then there’s the embarrassment. It`s easy to think that people will look down on us for getting into debt, even though it`s so common these days – in an increasingly complex financial world, it’s easy to lose track when we’re juggling mortgages, car finance, credit cards, overdrafts…"

Even in the current credit squeeze, it`s still easier to get credit today than it was in, say, 1950. That’s not necessarily a problem. There’s nothing wrong with taking on small debts that we can easily afford – the problems start when the repayments begin taking up income we need for other things.

But there’s no clear line between `manageable` debt and `unmanageable` debt, so how do we know when we’re sailing too close to the wind? One of the best ways to stay safe is to stay informed: talk to friends and family and don’t be afraid to get some professional debt advice.

"People are often surprised how much difference a few words of advice can make. They’re also surprised when they find out how many different debt solutions have been developed to help them get back in control of their finances, from debt management programmes and debt consolidation loans to Individual Voluntary Arrangements (IVAs) and remortgages."

"Once they’ve talked it over with a debt adviser, weighed up the pros and cons and decided which solution (if any) is right for them, they tend to find it’s easier to tackle their debt head-on – and wish they hadn’t kept it to themselves for so long."

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