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Low pay + high prices = debt misery
I volunteer for an advice agency and deal with some people's debt problems. Clients from all walks of life come in because they're worried and need the free help and advice we can offer.
Despite what the government and the media claim; most clients don't get into debt because of frivolous spending.
Anyway, what is 'essential' expenditure and what could be termed luxuries? People all have different needs, priorities and problems to deal with.
In the Tories' eyes the working class gets itself into debt by overspending, sitting around at home all day, or being "feckless". The reality is very different.
A lot of debt arises from sudden changes in circumstances such as job loss, relationship breakdown, death of a partner or the onset of illness.
Look how quickly 1,300 Jessops workers lost their jobs. An announcement on the news about administration was followed two days later by mass redundancy.
I have seen people working two or three jobs trying to stay afloat. This lifestyle isn't sustainable and sooner or later they fall prey to exhaustion or family practicalities.
I did it myself; I worked full time in an office, together with an early morning cleaning job and weekend factory work.
In the end I gave up the factory work as I had no life and was physically drained. I now have a young child, so even if I could sustain three jobs I would struggle with childcare.
I regularly see fuel debt. Utility firms keep increasing prices despite massive profits (in August 2012 Eon announced half year profits of £245 million), leading to fuel debt for both working and non-working people.
Fuel arrears are termed priority debt, ie these creditors must be paid first. So if someone has numerous debts, often including at least one payday lender, they need to concentrate on paying off their gas and electricity arrears.
Unfortunately what often happens is a payday lender such as Wonga exerts huge pressure on the client to clear their balance, and they end up paying them first.
It is worse when clients have rent or mortgage arrears. With payday lenders hassling them up to 15 times a day by phone, text or email, clients naturally want to get these companies off their backs.
Rent and mortgage arrears are also 'priority debts', and non-payment can have serious consequences.
Anyone falling behind with these payments should talk to their landlord or mortgage company urgently, or risk losing their home.
A repayment plan can be negotiated, and payday lenders have to wait until the client's priority debts are cleared.
The media never mention the physical and emotional effects of debt. I have seen clients suffering from malnutrition after living on diets of pasta, rice and little else, in an effort to clear their payday loans.
They want to pay their creditors but their income level does not let them pay the amounts demanded. And with payday lenders charging up to 4,000% interest, a small unpaid loan can quickly spiral out of control. One of our client's £200 payday loans soon turned into a £1,500 debt.
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