Transcript Of My Live Video Talk in a Private Facebook Group
I was invited to do a live talk in a private Facebook group two years ago.
This group was for women who were recovering from the trauma of Narcissistic Abuse or emotional and psychological abuse, including financial abuse.
I had a background in money advice when I worked with the CAB Citizen’s Advice Bureau when I was living in Sunderland, which was a long time ago.
I have been living in Spain for nine years. The money advice I’m going to discuss today is what I was trained in when I worked with the Citizens Advice Bureau.
Disclaimer.
I just want to say that I’m not a financial advisor, and I don’t do this for a living, either. If you have complex financial issues, you need to seek professional help.
I am going to explain the method that I trained in while working as an advisor. Today, I will talk about struggling to make ends meet. I created an acronym that I use, which is called PIES.
P= Prioritise, priority expenses
I= Income
E= Expenditure
S= Share of available income
Introduction
I’m going to walk through what that means because it’s something that I created a long time ago when I was helping people get out of or manage debt in a better way.
I used to help people who were struggling with their finances. I advised on welfare rights, attended tribunals, and ensured people were on the correct welfare benefits. Then, if they had many debts, I helped them reduce or obtain write off debts.
So, number one P is prioritising.
What I want to do is get started with this method.
So what you’re looking at here is to prioritise, and to list down all of your expenses that are what is considered a priority. So rent, mortgage, council tax, utilities, all of the things you need to be able to keep the roof over your head, keep your utilities on, and you need to identify all of these priority expenses and put them down in the list.
Now, when you list out the expenses, you can either do that on a monthly or a weekly basis, and I guess that depends on how you are paid. If you’re paid weekly, then you might want the budget weekly. If you’re paid monthly, then you might want the budget monthly.
So that’s the first thing to do with P, prioritise your expenses of what you need. Some people, for example, might need to prioritise a car and vehicle insurance. It might be the only mode of transport to go to work or drop the kids off at school, so that could be a priority. For other people, a car might be a luxury it might not be a priority. So, you need to list all of those expenses.
While doing that task, you might identify some expenses you can stop. Some monthly expenses that don’t need and will start to reduce your outgoings, things that you’ve forgotten about or subscribed to that you can stop paying for.
You might even think, oh, well, Netflix is not a priority. If you’re struggling, you could do without Netflix or Sky subscription or many other things. So that is what you can do first.
So the second letter is I. And that stands for income.
So what you need to do is list all of your income and that could come from lots of different sources. For example, you could be entitled to benefits and so you need to list the benefits, child benefits. You might be entitled to some sort of payment from an ex-partner. So everything that you have in income, any sources of income needs to be listed, whether it’s weekly or monthly.
Then what you need to look at is how you might increase that income.
There are lots of different things you can think about. And what I used to say to people is that you need to check if you are entitled to any welfare benefits you’re not claiming. That’s one thing that you need to check, if you’re on a low income and you haven’t claimed anything that will help you to top up your income. So that’s one thing that you need to think about.
The other one is if you’re in a job and you’re working as an employee on PAYE pay as you earn, taxpayer, you need to ensure that you are actually on the right tax code and that you’re not being overtaxed. That’s a way of helping you out. Are you due any tax refund, for example? This is another thing that you could check out and find out whether or not there’s any payment you could be due back.
Another way of increasing your income would be to think about an income-earning opportunity. Something that you can get started in relatively easy that is not going to cost you a lot of money to get started and basically, you can get word-of-mouth referrals through friends and family and things like that. Which is a great way, if you’re a little bit entrepreneurial, which I’ve been all my life, it’s a great way to try and increase your income.
Another one is if you have a spare room in the property because if you have a spare room and you can rent that room out, then you can have a rental income, which is tax-free income.
The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home.
For example, you could rent to a student if you’re in a university city, or you might want to rent to a professional if your property is near to a hospital or a big call centre or something like that, which would give you some form of income, and a simple way of doing it. And as I said, up to £7,500 per year is tax-free as well.
Next, you could also consider raking through all of your items you haven’t used for a long time and then making a sale. You could put items on Facebook, and sell things quickly and then recover a little bit more income to help you move forward. So, you can sell anything you haven’t used for a long time, even clothes or old toys that children don’t use anymore.
I’m sure people have lots of items that are just stored in the cupboards or in the loft or wherever that could be turned into cash. So that’s just another one of the ways to increase your income. There are probably a lot more ways to raise a bit of money, if anyone can think of more, then it might be a good idea to drop them in the comments so other people can see them and take notes. So that’s I, the income, listing all forms of income and trying to increase your income level.
Now, we move on to E. E is the Expenses.
That is non-priority. That means you don’t have to pay all the expenses because they’re not priorities. Credit cards could be something that you might be struggling with at the moment. It could be loans or, like I said, Netflix subscriptions to things that you don’t need to have running every month. Of course, you need to ensure you’ve got your food and all the other things as priorities. Here, you will list all those other expenses.
If you then find out or discover that, hopefully, all of the income that you’ve got coming in on a weekly or monthly basis covers all of the expenses that you have now,
That is a great place to be because, obviously, you’re not in a struggle; you’re not as bad as you think you were because your income covers your priority and non-priority expenses.
So if you’ve looked at increasing your income or even if you are looking at diversifying what you do or changing your job, all of these things. Now, if you find out after doing the income and expenses exercise that your income doesn’t cover all of your expenses. This isn’t a good place because you’re racking up debt every week and every month.
In this scenario, what you’d be thinking of is how you might have to scale down on your outgoings and expenses. You might need to look at a cheaper place to live. If you can’t increase your income, you’ve got to think of all the possibilities. You must get your head out of the sand and think about your future. Are you looking for a higher-paid job? Do you take on some other part-time job or work, or do you do something different? You can’t keep going if you have expenses that are more than your income.
So we’ve covered looking at the priority expenses, we’ve looked at how you might increase your income and listed all the income down, and now we’ve looked at all of the non-priority expenses.
So then, let’s have a look to see if you have any amount of money that is available that we call available income. So you’ve got a lot of debts and can’t manage all of the debts, but you have a little bit of income left over when you’ve checked all your priority debts, all your priority expenses. Now, we call that available income, which you’ve got left at the end of the week. That could be something like, I don’t know, £100 or £50. So if when you’ve done your income minus the priority expenses, minus the expenses, you have got some money left over, that’s your available income. So the last step in this method is S.
Now, S stands for the share of available income.
How this works is if you have two or three credit cards, for example, a loan or something like that, which aren’t a priority, it’s not a mortgage, a car loan, or hire-purchase, than any of these other types of debts non-priority. You can then consider sharing the available and leftover income with your non-priority creditors, credit cards, and loans. So, I always say, don’t worry about the situation because…
Being in debt is something that everybody gets into at some stage in their life or careers. Anything can happen. You can be ill for a long time, and if you’re not earning and your sick pay has run out and you end up on a benefit of sickness, very soon you find out that the credit cards are buying food, clothes, or whatever. Many people rack up significant amounts of debt and credit card debt. But you don’t need to panic. There is a simple formula for sharing the income you have left over when you’ve worked out what that is.
Basically, you take the amount of available income as the first amount. You divide that by the total of outstanding credit debts, which then gives you a figure that is usually something like zero point zero, one, six, nine, for example, whatever it is, depending on the amounts you are working with. That is the per pound pro rata amount you can share with creditors. And that is the basic formula.
(Available Income) divided by the (Total Debt Outstanding), which equals X, the per pound pro rata amount you use to make offers to your creditors from your available income.
Now you have a list of these non-priority creditors, all your credit cards or loans you can’t afford to pay because your income isn’t high enough. So, for example, somebody who has got a good income and they’ve got, say a £300 available income at the end of the month and they have outstanding debts of say 12,500. When they do that calculation, available income is divided by total outstanding, 12,500, and their per-pound pro-rata payment is 0.024, which is a small amount.
One of their debts is £10,000.
So £10,000 x 0.024 is £240 pounds. And so if the payment for that debt is more than £240 pounds, you haven’t got enough money to pay the full amount. So, you would need to write letters to all of the creditors and make an offer of repayment based on a lower amount paid on a pro-rata basis. And in the case of the 10,000 loan on this pro-rata payment where you’ve got £300, you’d be telling the creditor, I have got £240 per month, and I would like to pay this amount to this loan, okay?
Now they have other debts, so they have a £1,800 payment to somewhere else, and they do the pro-rata calculation, which is (0.024 times x 1,800) that’s £44 per month. So that particular creditor would be offered £44 per month in any letter you send out or a phone call with that creditor. A third debt or creditor has an outstanding amount of £500, so you do the same calculation. Now, that particular creditor would end up with a £12 payment per month, and their final debt is a £200 loan that will be paid off at £4 per month.
And obviously, a disclaimer is…
Suppose you have a really good credit score at the moment, when you start to write these types of letters to creditors to say, I’m struggling and don’t have enough income at the moment, something’s gone wrong, this has happened, and I need to restructure. The creditor will mark your credit records to say that you are making a reduced payment,
and it’s not the end of the world at this point. It just means that your record would not be perfect. So, this is the simplest way to deal with non-priority creditors because what you need to be looking at is just to write a standard letter and then put the list of your income, the list of your expenditures, show what money you have available, then list all the creditors that you have, one, two, three, four, five, whatever they are, with the outstanding balance, and then how much for each creditor that you prepared to offer. Then, that letter gets sent to every creditor so they can see your situation and accept or reject the offer you’ve made.
But I would say, nine times out of ten, if you’ve taken your head out of the sand, and you’ve done your homework, and you’ve got everything in order, and you’ve shown the creditors that you’re willing to make payments, then nine times out of ten they’ll say, yes, okay. And they’ll start accepting whatever offer you can make. You can explain that it’s a temporary situation; things might improve within a certain time, and you can revisit the situation three months, six months, or whatever. So that’s the simplest way to do it.
Now with credit cards it’s revolving credit
You can make a request with credit cards because it’s a revolving credit, and interest is always added. Then, you can ask them to freeze the rate and the interest because if you pay a lower amount every time they add interest, the debt just goes back up. So, in communications with credit card companies it’s a good idea to request a freeze on the interest. And again, if you’re confident enough and can write those types of letters, which you can find all over the internet, you just need to Google, and you’ll find them where you can copy or download, probably on the CAB website.Then, you can ask for the credit card interest to be frozen so that any payment you make will reduce the debt’s value.
If you are confident and you can call your creditors, make a list of the creditors, do all of your homework, they might ask you to email details of your income and expenditure, but if you can do that, you can make phone calls. But what I would say is always have a notepad and a pen and keep a record of when you’ve called, the date you’ve called, and even ask who you’ve spoken to.
So that you’ve got a record, for example, I rang this company on this date, and I spoke with, and it was agreed, whatever is agreed that you pay at this time, or that you make a different payment to the agreed payment. So you’ve always got a record of what you are doing.
Coerced Debts or Loan Agreements
Something else that sometimes happens, which includes people like myself who’ve been in relationships with guys who might have used manipulation tactics and may have coerced you into signing financial agreements that you didn’t really want to sign. You could end up with debts in your name because the person didn’t have a good credit record, which can happen. I’ve done it myself. I’ve been there, and I got the t-shirt.
But now the law is changing, and for me, it was a long time ago. There were no such laws then, and so I had to figure a way out for myself, which I did. It took a long time, seven years, to repair the credit record, but I did it. I managed to buy a house back in Sunderland a long time ago, so I repaired my credit record.
Now, if an ex-partner or a spouse or a boyfriend has gotten you into financial difficulties, you’ve signed for things you didn’t want to sign for, then this is called economic abuse.
It’s domestic abuse, and more banks and credit card companies are becoming informed about this. The organisation you might have heard of is called SEA which stands for Surviving Economic Abuse. You can find them on Facebook and Twitter, and if you Google Surviving Economic Abuse, the website will come up there as well.
What that organisation is doing is raising awareness within the financial organisations and government and helping to change the legislation so that financial abuse and economic abuse are starting to be recognised now and that women who get into this situation with abusive partners can get some remedies.
SEA don’t work one-to-one with victims or survivors but you can get the information from the internet and get help from various organisations. And when you’re calling in to speak to banks, credit cards or loan companies, if you actually say to them what the situation is, then quite often they have a specialist advisor who can help you.
I believe this is called “vulnerable customer support.” So if you phone in or if you’re writing and you’re in that situation of coerced debts, ask them if they have vulnerable customer support. If they do, then they will know what you mean by that.
You could get more assistance and support with what you want to tell them. With your permission, they’ll keep any of your communication on file. So if you need to call back or get back in touch, you don’t have to start at the beginning, explain everything that’s happened, and go over all the traumatic events that you’ve been through. I know what it’s like, and it can be traumatic.
Another helpful support I would signpost you to would be the Citizens Advice Bureau, the organisation I worked for a long time ago. When you Google that, you’ll probably find the CAB website where they’ve got money and debt sample letters that you can model and send to creditors.
So, my advice is to tackle your financial struggles yourself. It’s not difficult unless you’ve got a complex situation. But if it’s straightforward, you can do it yourself. I advise against going with any organisation that offers help but involves fees where a percentage of your payment goes to them for administrative purposes. And for me, I don’t think that’s right. If you can do it yourself, then all of the money that you have as available income is going towards the debt.
So, dealing with creditors is not difficult once you know where you are with your finances, income, and expenses. You’ve identified your priorities and got those covered, so you’re not in danger of losing your house or getting your utilities cut off. That’s a good place to be. Then you just need to work out how you will manage the other expenses, which I’ve been through with all the explanations about increasing your income, reducing your expenses and then creating a budget based on what I’ve just explained with this method.
The only thing I might have missed is that when we’re talking about coerced debt and debt that you’ve racked up because of another person, you may be able to request a write-off.
Getting Debts Written Off
So if you’ve signed up for something but didn’t want that, and you can prove that it wasn’t for you because you won’t, you will never ride a motorbike. You don’t know how to ride a motorbike, but you bought one anyway because it wasn’t for you but for him. Then, you might be able to request a write-off of the debt. I know women have been coerced into buying all sorts of things; I’ve heard stories that a guy wanted a boat, and this woman signed for one. And that caused massive problems for her in the future because there wasn’t any economic abuse when she did that.
This was my talk on money struggles a couple of years ago. I hope it’s been useful for everyone. Now, before I finish up, I want to tell you about a zero-cost, no-commitment private support community on Facebook.
I set up the group under my brand Success With Loraine – it is still a work in progress because I’m still rebuilding my life. It’s a private, safe space for women aged 40+ to connect, heal and grow from trauma to transformation. The theme is Master your Mindset, Multiply your Money, Maximise your Success.
If this is you, Join Here.
And I’ll see you in the group.
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