Debt can happen to anyone.
It is how we deal with it that can have a major impact on our lives.
Owing money can be stressful. It can make us anxious and affect our mental wellbeing, as well as our financial wellbeing.
This year’s Debt Awareness Week runs from Monday, March 20th to Saturday, March 26th.
It is an important topic and we want to play our part in highlighting it!
Being fully aware of the debt you have – and how you are dealing with it – is so, so important. It can affect how we feel, think and act. It can heavily influence our emotional, psychological and social wellbeing.
How can we explain what debt is? Well, in simple parlance it is anything owed by one person (or organisation) to another.
Debt can involve money, property, services etc. A loan is a form of debt, but more specifically is an agreement in which one party lends money to another.
When you borrow money to pay for something, it is called being ‘in debt’.
Now debt can be a burden, there is no question about that, but it is also viewed as a valuable tool in the world of finance. It can help you purchase a home, cover an unforeseen emergency, enable you to get your children through university, and cover any big cost such as a wedding.
When explaining debt it is important to show both sides of debt. There is ‘good’ and ‘bad’.
Debt can be classed as a ‘good thing’ – a useful tool – when used responsibly. It can help with gaining credit – and having better financial opportunities and circumstances in the future. Such things as a mortgage, or a car loan, can be classed as good debt.
However, debt can sometimes be overwhelming. When not managed well, or paid on time, it can become a millstone around our necks. It can become ‘bad debt’. Try and avoid spending money on unnecessary things, or just remember that if you spend money with credit on big purchases like expensive clothing and gadgets then those things will decrease in value over time, but you will still be left with repayments and interest fees.
Of course it is vital to remember: to stop ‘good debt’ tumbling into ‘bad debt’ category you must maintain your repayments and pay back the money you have borrowed in the time stipulated by the original agreement.
It is natural that you might be nervous about opening up about your money worries – and your concerns about dealing with debt.
Indeed, one in four workers say they lose sleep because of financial concerns. Employees with money worries are almost five times more likely to suffer from depression, while four out of five workers, according to PwC, find it impossible to get from one pay cheque to another.
Those are concerning statistics, and debt can add to the stress. Your financial health also affects your mental health.
That’s why it is so important to be aware of the debt you have – and to be able to deal with it.
If you are ‘drowning’ with ‘bad debt’ then there are things you can do, such as debt consolidation, or a debt management programme.
If you need further help dealing with debt, then services who are reputable and reliable for those in need of specialised debt management include:
- Citizens Advice (tel: 0800 144 8848)
- Step Change (tel: 0800 138 1111)
- National Debtline (tel: 0808 808 4000)