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In a poll conducted by The National Foundation for Credit Counseling (United States) participants to were asked to complete this sentence: “I’d be most embarrassed to admit my…” 37% of people answered “my credit card debt;” and 30% “my credit score.”
These were the two most popular responses with the study making it clear that debt is a greater source of shame than even weight and diet – which came in at only 12%.
The picture in Scotland does not appear all that different. Based on the feedback we have received from over 20,000 clients, we know that a debt problem can lead to a string of shame and embarrassment.
Many people in Scotland struggle to even talk about their debt problem, let alone to reach out and get help.
If you’re feeling ashamed, guilty or embarrassed about your debt you are not alone. We receive hundreds of calls every month from people just like you: people in debt, struggling to make ends meet and feeling helpless. The UK is in the midst of a debt crisis. Personal, unsecured debt has soared to unprecedented levels – to £55,438 on average in Scotland alone.
While we would never advocate giving up all responsibility, a lot has happened economically and politically in the last decade beyond our control – from wage growth stagnation, to wage and public service cuts and restricted access to quality sources of credit.
All of this is without even touching on more personal, unforeseen, changes in circumstances like losing your job, medical problems or utility breakdowns.
The Debt Spiral
Though it may seem difficult, it’s important not to beat yourself up and buy into popular misconceptions about debt. It’s a common belief that people land in debt because they’re bad with money, their spending is out of control and they are living beyond their means. From our experience, this could not be further from the truth. The truth is that a debt problem does not arise from one reckless purchase, nor does it happen overnight. Problem debt builds up as a result of a spiral effect:
- for any multitude of reasons, you struggle to pay essential bills;
- you borrow to fill that gap;
- much of your income is now tied up in repaying loans, and; you now have to keep borrowing to keep your head above water.
We’ve heard from thousands of people and families that have gotten stuck in this spiral over the years. Most were simply trying to make ends meet (with perhaps some bad spending habits).
We’ve spoken previously about the effect debt can have on your mental health. Devastating personal accounts of debt have surfaced in the last year.
First 21-year-old Jerome Rodgers, who’s debt problem began with a broken bike and a penalty charge for cycling in a bus lane. It ended with him taking his own life. So too did Nigel Hurst, a father of two, who’s debt problem started with a missed council tax payment.
These, and thousands of others are not stories of negligent overspending, but instead, normal people trying to get by. They deserved compassion, most importantly self-compassion, and not shame. So do you.
Getting Informed and Predatory Lending
The main effect of the debt spiral is that once you are in debt it’s difficult to get out of it. This is made worse by the confusing, often overwhelming jargon terms used in the financial industry. This jargon makes the already daunting first steps to tackling your debt seem even more intimidating – you may find our Jargon Busting Guide helpful.
On top of this, our education system does little to prepare us for the practicalities of budgeting and financial planning. In 2011, a study published in the Journal of Economic Psychology found that those who aren’t well-versed in finances are more likely to spend compulsively, use expensive credit, and experience difficulty following changes in income or unforeseen events.
Financial education was only made compulsory in the school curriculum in 2014, and even now The Money Charity report that over 75% of teachers consider it “somewhat or very ineffective.”
Further, there are businesses and entire industries built upon predatory lending. Of course, the main examples are payday loan companies.
The FCA, the UK’s financial regulator, has taken interest in the advertising practices of payday lenders, as opposed to the high (and increasing) cost of these loans. Even more reputable lenders like banks have a lot to answer for in terms of profiting from growing consumer debt levels.
Throughout 2017 and 2018, 1 in 3 credit card owners reported that their borrowing limit was doubled, or in some cases quadrupled without having asked for an increase.
Citizens Advice have led complaints in this regard, stating that lenders are “actively pushing debt on to those who cannot afford it.”
Given that you likely received little or no help in managing your spending and finances; and that many companies actually have a vested interest in the national debt crisis, you should reconsider shaming yourself because of a debt problem.
Taking Back Control
Apart from for the good of your mental health, the main reason why you shouldn’t feel ashamed of your debt problem is that embarrassment will not help to improve your situation. In fact, it will make it even worse.
When something leaves us anxious, embarrassed and ashamed, it’s easier to hide from and avoid that feeling, than it is to deal with it.
People are pretty good at hiding from their debt problem, no matter how severe it is.
Think of the times where you avoided looking at your bank statement for days or avoided talking about money with others because it reminds you about your situation.
Hiding debt from yourself is the best way to increase the amount that you owe. Instead of hiding, it’s important that you face up to how much you owe and come to understand how your problem arose without judging yourself.
Your debt problem does not define you as a person.
If, on top of the common issues identified above, you have made poor spending decisions in the past, this is not a reflection of your character. It is merely a bad habit which you can fix with the right information, strategy and a bit of time.
From this more self-compassionate headspace, you can address the problem and get your finances, and your life, back on track. As a starting point, you can consider our comprehensive guides on budgeting and debt consolidation.
Should your problem require more drastic measures, and debt has really gotten on top of you, we can help with a more head-on option. We specialise in debt advice for the residents of Scotland. Our expert advisors are FCA approved and have helped over 20,000 people to become debt free.