Tag: Debt

  • 10 Silliest Lottery Winners in History

    10 Silliest Lottery Winners in History

    Most of us have dreamt of winning the lottery. Many would buy or upgrade their home, invest in a new car or maybe take a few expensive holidays abroad. Heck, we would even probably go on the odd crazy shopping spree every once in a while – all the while knowing that there is an end to the supply of cash. Others might simply lose their marbles and blow the whole lot.

    You’ll probably sit there thinking “idiots!” – but who knows how much winning the lottery could change you. It could turn you into an absolute fool over night – just like the following 10 people The Big Money Guide will soon tell you all about.

    Here are the 10 silliest lottery winners in history – and trust us, these stories are pretty stupid!

    1. Hooked on Hookers – Michael Carroll

    Michael Carroll
    image via www.peoples.ru

    Michael Carroll thought all his Christmases had come at once when he won £9.7 million ($15 million) in the UK’s lottery back in 2002. An overnight millionaire, Michael was quick to lap up the life of luxury, developing a penchant for flash cars, crazy parties, cocaine and hookers.

    The crazy lifestyle soon came to an end in 2007, as Michael had blew all of his lottery winnings and was back to square one working as a bin man.

    2. Karma Kindness – Tonda Lynn Dickerson

    waffle house
    image via www.deathandtaxesmag.com

    Karma came back to bite Tonda Lynn Dickerson, who refused to split her $10 million lottery win with her Waffle House colleagues and Mr Steward, a customer who bought the ticket for the Waffle House employees.

    Not only did she refuse to share the cash with her colleagues, but she did not give Mr Steward the gift of a pick-up truck that was always promised to him if the staff ever won. So, he sued.

    In the middle of the lawsuit, Tonda Lynn Dickerson decided to embark on a little tax planning with her family, forming the S corporation in Florida to safely store her winnings. This entity therefore protected the cash from potential creditors. She therefore retained 49% of the money, whilst her parents and siblings had a share of 51%. Little did she know she would receive a large tax bill of $771,570, which was given to her by Toye Sue Washington, an attorney with the Estates Division if the IRS, for unpaid federal gift tax.

    Tonda, not wanting to part with her winnings, challenged the IRS, claiming the amount was not a gift as she had agreed with her family that she would share her money if she ever won the lottery. Yeah, that’s still a gift, Tonda!

    Thirteen years later, it was confirmed it was a gift. She was therefore ordered to pay $1,119,347.90.

    3. Marriage Crack – Willie Hurt

    cash
    image via www.galleryhip.com

    Winning the lottery would be a dream come true for most families, but not for Willie Hurt and his loved ones. Two years after winning $3.1 million in the Michigan Lottery, Willie Hurt divorced his wife, lost custody of his children, developed a crack-cocaine addiction and was charged with attempted murder.

    His drug addiction became so bad that he lost his entire fortune, as well as his whole life.

    4. Bad Blood – William “Bud” Post

    willie hurt
    image via www.galleryhip.com

    You would think your family would be happy for you if you bagged $16.2 million lottery jackpot, but not William “Bud” Post’s family. Not only did his ex-girlfriend sue him for a share and win, but his brother hired a hit-man to inherit the winnings but the attempt was, thankfully, unsuccessful. His family would also continually harass him for cash and offered advice on some bad investments.

    Within a year, he was left with a $1 million debt and was forced to file for bankruptcy.

    5. Construction Calamity

    americo lopes
    image via www.cnn.com

    Americo Lopes, a construction worker, won the lottery, quit his job and claimed he was leaving for foot surgery. He later admitted to an ex-colleague that he had won the lottery, failing to share the prize with his colleagues – who were all owed a cut. His ex-colleague and the rest of his workmates got together to confront Lopes, and the court ordered him to split the cash.

    6. Dumb Debt – Suzanne Mullins

    money down the drain
    image via www.risk.net

    Suzanne Mullins won the US lottery in 1993 and smartly opted to receive yearly payouts instead of a full cash lump sum. She was, however, a little bit silly with her money, using future payouts as collateral for a $200,000 loan.

    She later decided to take the full lump sum to pay the debt, but was never able to pay back the full amount. As she failed to make the loan repayments, the company filed a law suit and won for $154,000 settlement. Unfortunately for the loan company, Suzanne had no assets to her name and so the lawsuit was absolutely worthless.

    7. Two-Time Millionaire – Evelyn Adams

    evelyn adams
    image via imgarcade.com

    Few people can claim they have won the lottery once, and so it is rare that a person can win the lottery a second time around – but that’s just what Evelyn Adams did back in 1985 and 1986.

    She won a reported $5.4 million but blew all that cold, hard cash in Atlantic City, according to AskMen.com. She now lives in a trailer park.

    8. Silly Smarts – Alex and Rhoda Toth

    alex and rhoda toth
    image via www.pixshark.com

    Back in 1990, Alex and Rhoda Toth won $13 million on the lottery when they were penniless. Not wanting to splash the cash too soon, they chose to receive $666,666 per year for the next twenty years. A smart move for a couple who have just won the lottery.

    The couple decided to live the high life in Las Vegas for a while, but eventually chose to return home to Florida to buy some land and set-up a home. Family members, however, came out of the woodwork wanting a share of the cash, and so Alex and Rhoda were faced with crippling court fees and legal dramas.

    Between 2002 to 2005, Alex was arrested for growing marijuana and writing bad cheques. They lost everything, and eventually had to live in a tiny trailer on half an acre of land, with their electricity source coming from their car’s engine.

    In 2006, the couple were arrested for tax evasion. Unfortunately Alex passed away whilst awaiting trial, whilst Rhoda claimed she was too ill to stand trial. It later turned out that Rhoda was lying, as a video emerged of her moving with ease, and so she was sentenced to two years in prison and was forced to pay $1.1 million to the IRS.

    9. Illegal Lotto

    erik cervantes
    image via www.elnuevogeorgia.com

    Jose Antonio Cua-Toc, an illegal immigrant from Guatemala, put his trust in the wrong person when he won the lottery in Georgia, USA. Knowing he couldn’t legally claim the cash, he asked Erick Cervantes, his employer, to claim the prize for him. Unfortunately for Jose, his boss claimed the cash as his own, and so they two men headed to court to resolve the argument. Jose Antonio luckily won the money back, minus his attorney and tax fees.

    10. Spending Spree – Vivian Nicholson

    Vivian Nicholson
    image via www.theguardian.com

    Way back in 1961, Vivian and Keith Nicholson won the pools, Vivian stated she planned on shopping away all the cash. True to her word, Vivian spent all the money on haute couture and just a few years later there was nothing left of her lump sum.

  • The Ultimate Money Management Guide

    The Ultimate Money Management Guide

    Introduction

    Our aim is to help you effectively manage your money to improve your finances to help you steer clear of debt. This guide is therefore packed full of informative tips to help boost your bank balance.

    Who is the Guide for?

    Our Money Management Guide is for everyone. Whether you are struggling to manage your finances, suffering from debt or just want some helpful money advice, we can provide the tools you need to fix your finances once and for all.

    Do I Need to Read the Whole Guide?

    We recommend you read the guide from beginning to end if you really want to make the most of our advice. However, we’ve separated our tips into handy chapters to help you easily find the tips that apply to your needs.

    Piggy bank

    Part 1 – Personal Budget

    In this chapter, we’ll provide helpful hints and tips to help sort your finances, such as boosting your income, planning a budget, comparison shopping, as well as helpful tools that could help you step out of the red.

    Part 2 – Financial Support

    In this chapter, you’ll identify new ways to receive financial support and advice. You’ll read about financial opportunities you might have been previously unaware of, as well as schemes and grants that can improve your circumstances.

    Part 3 – Debt Management

    We’ll provide handy debt management tips in this chapter, so you can say sayonara to your debt worries. You’ll learn how to talk to your lender to resolve outstanding debts, make an informed decision on consolidation loans and how to prevent stepping into a debt spiral.

    Part 1 – Personal Budget

    Before you start, we recommend you grab a pen and a piece of paper to take some notes, as we’re going to offer a few money management tips that you’ll need to follow.
    Now that you have your pen and paper at the ready, we can start.

    Step 1: Write down a list of your monthly debts.

    Step 2: Once you’ve done that, number them from your highest priority debts down to the smallest priorities (1 being the highest). Priority debts are often things such as a mortgage, rent, council tax and utility bills.

    Step 3: Take a look at your small debts, which are usually things like credit card repayments. Could you boost up the repayments to eliminate the debt as soon as possible? Removing a debt as quickly as financially achievable will reduce the stress on your bank balance.

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    The Domino Effect

    Think of your finances as dominoes. Try to knock each one down until there are no more left standing. By eliminating the smaller debts first, you’ll give yourself more financial room to kick your bigger debts to the kerb. You’ll then have financial freedom to do all those things you’ve been dreaming of – such as buying a new car, taking a holiday or home improvement tasks. Sounds good, right?

    Plan a Budget

    One of the reasons you might be struggling with debt is because there’s more money going out than coming in – that’s why it’s essential to continually review your finances.

    Remember when we asked you to write down a list of your debts earlier? Write down how much each debt is costing you on a monthly basis, add the sum together and see whether you’re living beyond your means. Don’t worry if you are, we’re about to provide some helpful tips to help reshuffle your finances. The Citizen Advice offer an easy household budgeting tool.

    Budget Tip #1: Comparison Shopping

    Most of us spend more money than we actually have to – and many of us don’t even realise we’re doing it. Websites such as comparethemarket.com and confused.com are superb tools to see if you’re receiving the best bang for your buck.

    Here are some ways you easily reduce your finances:

    • Compare insurance policies online (including car, life, employment and health insurance)

    • Switch energy providers for a better deal

    • Browse the market for the best grocery deals

    • Compare banks to see if you can receive a better deal

    Budget Tip #2: Grocery Shopping

    The thought of switching from premium brands might not sound like an appealing alternative, but there really is little difference in the quality of the food. All foods sold in store are subject to strict tests by the Food Standards Agency to ensure quality; therefore, you can trust they wouldn’t be sold in store if they weren’t up to standard. Switching to no frills produce really is a great way to cut back on your finances without changing your lifestyle. So there’s no harm in switching for a week to see if it boosts your pockets without impacting a diet.

    Budget Tip #3: Savings Day

    Pick one day every few months to spend time ringing suppliers to see if you’re entitled to a better deal. You could find that a provider is willing to cut back on a package due to customer loyalty or because they sympathise with your financial situation. You could save hundreds of pounds per year simply by rearranging a repayment plan.

    Budget Tip #4: Recycle Old Goods

    You could be sitting on more money than you realise. Look in your cupboards and drawers to see if you can flog any old phones, games consoles, DVDS, books or even clothes. Websites such as Music Magpie offer a great facility to flog your old stuff in one quick swoop. They’ll even pick it up from your address.

    Budget Tip #5: Pay Debts with Savings

    Should you find you have a little extra money remaining one month, we suggest you use it to pay off your debts. Whilst your first thought might be what you can be buy with your influx of cash, think of how much better you’ll feel knowing you’ve paid off all your debts. That’s a feeling even money can’t buy.

    Part 2 – Financial Support

    piggy bank
    image via www.lookfordiagnosis.com

    Did you know you might be missing out on extra cash? So many people are unaware that there are financial opportunities out there just waiting to snapped up. For this reason, we’ve compiled a list of helpful money breaks that could help you take control of your finances.

    Finance Tip #1: Benefits Check

    If your family earns less than £72,000 per year, you could be entitled to benefits, such as tax credits. A great way to identify if you’re eligible for benefits is to take Money Saving Expert’s Benefit’s Check Up tool.

    Finance Tip #2: Uniform Tax Rebate

    You might be surprised to learn you can claim a tax rebate between £12 to £56 per year if you wear a uniform. The money covers the cost of washing, repairing and replacing the garments – and you can claim back cash for the past six years. Visit http://www.uniformtaxrebate.co.uk/ for more information.

    Finance Tip #3: Tax Rebate

    Most people don’t check they’re on the right tax code, and could therefore be missing out on a significant amount of money each year. You should therefore ensure you’re on the right tax code, as you could receive a rebate if you’ve paid too much. Visit http://www.hmrc.gov.uk/incometax/tax-codes.htm to find out what tax code you should be on.

    Finance Tip #4: Energy Grants

    As we all know, utility bills are becoming more and more expensive. However, there is support out there to help with heating bills. However, to do so you’ll need to know what energy saving measures you have in place (such as double glazing or cavity wall insulation), as well as a rough idea of when your home was first built. Visit https://www.gov.uk/energy-grants-calculator to find out if you’re entitled to help.

    Finance Tip #5: Support for Mortgage Interest

    Homeowners receiving income related benefits could be entitled to government help towards interest payments on mortgages and loans. This is known as Support for Mortgage Interest (SMI) and will be paid straight to a lender. However, the help will only be towards the interest and not the borrowed amount. Apply for SMI here: https://www.gov.uk/support-for-mortgage-interest

    Finance Tip #6: Energy Trust Schemes

    Many utility suppliers offer an Energy Trust scheme to their account holders if they’re struggling with their finances. In order to receive help, account holders will have to complete a full income and expenditure budget sheet, as well as providing proof of income. Debt details will also need to be provided, such as how the arrears have built up; for example, redundancy or illness. Visit British Gas Energy Trust, Npower Energy Fund or EDF Energy Trust for more information.

    Finance Tip #7: WaterSure Scheme

    The WaterSure scheme can cap your average household water bills if you:

    • are on a meter

    • are entitled to benefits

    • have 3 or more children (under the age of 19) living in your home

    • have someone living in your home with a medical condition

    It’s also worth talking to a water provider to see if you are entitled to special tariffs that could match payments or write off your existing water debt by entering an arrears repayment plan.

    Finance Tip #8: Local Council or Housing Association Grants

    Your local council or housing association may be able to offer Home Repair Assistance Grants to help you with repairs or improvements within your home. Each local council will offer different grants, so it’s worth visiting their website to see what you may be entitled to.

    Part 3 – Debt Management

    British pounds

    There is no shame about being in debt. £163 million was the daily amount of interest paid on personal debt in November 2013 – so you can trust you’re not alone. Many people fall into debt due to a number of reasons, but it’s how you deal with your financial situation that will set you apart from the crowd. While it might seem easier to suffer in silence, it’s really not. You need to tackle the problem head on to quickly recover your finances, and here’s how…

    Debt Tip #1: Talk to Your Lender

    If you have struggling to meet debt repayments, the first thing you must do is talk to your lender. Explain to them your financial situation to see if you can arrange a new debt repayment plan – but ensure excessive interest rates won’t be added on top of the amount.

    Debt Tip #2: Repay Debts Quickly

    You should strive to repay your debts as soon as possible. Try to pay back as much as you can afford each month – which could mean paying more back than you originally owe that week or month. The sooner you make the repayments, the sooner you’ll be debt free. If not you may find you’ll need the assistance of good lawyers such as those at Strom & Associates.

    Debt Tip #3: Avoid a Debt Spiral

    It can be so easy to fall into a debt spiral when faced with debt. What you must not do is enter into one debt to pay for another. This is a vicious circle that will not only sink you into further debt, but will take a toll on your personal life.

    Debt Tip #4: Never Take Out a Payday Loan

    There is a reason payday loan companies are criticised so widely in the media, and that’s because they offer loans with excessive interest fees. Even though the money can be delivered to your account the same day, the service comes at the cost of your bank balance. Avoid.

    Debt Tip #5: Consider a Consolidation Loan

    Should you have multiple debts that are taking a toll on your finances on a monthly basis, a consolidation loan might just be the answer. Instead of paying multiple debts to multiple lenders, you could consolidate all your existing debts into one affordable monthly repayment to one lender. Therefore, you can quickly eliminate your finances whilst taking the weight of the debt off your shoulders.

    Summary

    When it comes to managing your money, you just have to remember to plan ahead, make the most of financial opportunities and avoid being sucked into a debt spiral. It really is as simple as it sounds.

  • One More Reason Why Britons are Sliding into Debt

    One More Reason Why Britons are Sliding into Debt

    What would happen to a nation if its citizens were to gradually earn less instead of more? A logical answer to that question would be that they would eventually succumb to debt and that many of them will in the end face bankruptcy.

    The sad reality is that we are not talking about a theoretical nation here. According to the results of a new study by the TUC, the level of real earnings in the UK has been dropping consistently over the past seven years.

    The study reveals that since 2007, there was a drop of 8% in average real earnings in the country after taking into account escalating prices and an absence of wage growth to compensate for the former.

    couple-talking-about-debt

    This means the latest pay squeeze is worse than what happened during the Great Depression. It is, in fact, the worst since the start of the Victorian era around 150 years ago.

    The fall in real spending power of British consumers was shown to be more than double the reductions recorded during the financial crises of 1865-1867, 1874-1878, 1921-1923 and 1976 to 1977.

    During the worst of these recessions real income dropped by only 4%. The latest downturn is also lasting much longer than any of the recessions quoted above, which makes it fair to say that we are living in the worst recession in recent history.

    Frances O’Grady, the secretary general of the TUC, called the situation ‘shocking’ and said: “The government says the economy is growing again, but there’s no evidence of any recovery in ordinary workers’ pay packets.”

     

  • Tenants Have Less Protection Against Financial Disasters

    Tenants Have Less Protection Against Financial Disasters

    New research by insurance firm Aviva reveals that many of the seven million people in the UK who are currently renting a property are more vulnerable to debt problems should they suffer a sudden and unexpected loss of earnings or incur unforeseen expenditure.

    The study revealed that, while 13% of those living in a home with a mortgage have income protection, only 2% of individuals who live in rented accommodation have this type of insurance. For further advice, consult a real estate attorney.

    When it comes to critical illness cover, the situation is much the same, with 19% of homeowners having cover, compared to only 3% of those who rent.

    frustrated man

    A similar picture emerges when we look at life insurance: just over half (51%) of those who live in a home with a mortgage have life insurance, while the percentage drops to 23% for those who are renting.

    There is also considerable disparity between the two groups when it comes to home contents insurance, with 73% of home owners financed with mortgages being protected by this type of insurance, compared to the 40% of those who rent accommodation.

    The company’s protection director, Louise Colley, said: “When someone takes out a mortgage they are often asked to consider how they might pay it if they were seriously ill or if sadly an income-earner was to die.”

    She added: “If a family rents, these conversations may not happen, so there’s a risk that if a renting family loses an income, they may not have the protection that could help to pay the rent and cover the bills.”

  • Insurer Highlights Increasing Debt Levels Among Individuals Over 55

    In a recent article we reported on research carried out by the British charity StepChange, which showed that problem debt is costing the UK in the region of £8.3 billion a year. Traditionally, debt has been a much bigger problem in the under-40 age group, but a new study recently revealed that debt among the country’s over-55 population is rapidly increasing.

    According to insurance firm Aviva, debt among this age group has surged by nearly 20% over the last year, as Britons seem to have once again adopted a lifestyle of high spending.

    The average individual in this age group now owes about £1,680 in unsecured debt, significantly higher than the figure of £1,420 recorded a year ago.

    Senior woman paying bills

    While overdraft debt has also shown an increase, the problem areas mainly seem to be credit card debt, which has increased by 10% compared to the same time last year, and personal loan debt, which has surged by nearly a third over the last year. To help save you need to ensure you are not signed up to unnecessary prescriptions too.

    The insurer ascribes the relatively high debt levels to people whose house prices have increased rapidly and they now feel confident to spend their savings.

    Aviva issued a stern warning that individuals approaching retirement age should under no circumstances waste their savings in the belief that house values will continue to appreciate, thereby increasing their overall wealth.

    The thought that this might make up for any shortfall in pensions could be completely erroneous.

    That is sound advice for those who are not yet in debt. Those who have already slipped into debt should get expert debt management advice before their credit ratings are severely damaged.

  • Two More Reasons Why Many Britons are Slipping into Debt

    Two More Reasons Why Many Britons are Slipping into Debt

    Ever wondered why your pay cheque is simply not going as far as it used to and why you are trapped in a spiral of debt? The reason might not be financial mismanagement as many experts claim.

    According to a new study by the consumer group Which?, we are currently paying £410 per year more for our energy bills than a decade ago – after making provision for inflation.

    The study analysed how Britons’ spending on energy has sky-rocketed by a whopping 52 per cent over the last 10 years. At 2012 prices the average electricity bill in 2003/04 was £790. Using the same price index it has now escalated to £1,200 – and this during a decade during which energy usage went down 17 per cent.

    Redundant

    Richard Lloyd, the group’s executive director, said: “It is shocking that people are paying more despite using less.”

    That is not the end of the story either. While it might be good news for landlords, tenants can certainly not be too happy that the average rent now stands at £768 per month.

    While that is only 1.2 per cent higher than a year ago, the news still angered Shelter’s chief executive, Campbell Robb, who stated: “Once again, England’s nine million renters are paying a steep price for our broken housing market.”

    Robb added that the fact that there is simply not enough affordable homes available for rent is forcing increasing numbers of individuals into private rental properties that they cannot really afford, leaving many of them scrambling to make a living – with virtually no promise of putting down permanent roots.

  • Chorley Residents have 4th Highest Per Capita Personal Debt in the UK

    Chorley Residents have 4th Highest Per Capita Personal Debt in the UK

    Although the latest figures about per capita personal loan debt in the Chorley region do not cover all building societies and banks, they are nevertheless quite worrying.

    Data compiled by the Council of Mortgage Lenders and the British Bankers’ Association shows that the average resident of Chorley has a personal loan debt of more than £1,400. There are only three regions in the UK where this figure is higher: London, Newcastle-upon-Tyne and Peterborough.

    Nine major banking groups and building societies took part in the voluntary survey.

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    Chorley Council is doing its best to help residents to cope with debt problems. The council wants to force loan sharks out of business and it plans to ban all advertisements from payday loan companies on the advertising websites it owns.

    A credit union shop has also been opened by the council in the centre of the town to provide locals with an alternative to payday loan firms and loan sharks. The shop has already been doing business for more than a year and support from the community is growing steadily.

    Lindsay Hoyle, the MP for Chorley, said that it was extremely disturbing to learn that residents of the town have such high debt levels and ascribed the situation to current economic circumstances.

    Chorley added: “The Credit Union has done a fantastic job in the town and I want to promote the work they have done. It’s vital people use the services on offer rather than going to loan sharks and pay day loan companies, the credit union is a safe way to borrow money.”

  • Housing Costs Eating Away at Disposable Income

    Housing Costs Eating Away at Disposable Income

    If you ever wonder why you still haven’t figured how to get out of debt after so many years a new study might have the answer: it’s simply because average weekly wages have failed to keep pace with the rising cost of living. Almost everything we buy has suffered from price hikes due to inflation and profit hungry companies – particularly in the last few years.

    Research by estate agents eMoov found that the cost of 20 cigarettes has increased by 4,370% over the last 40 years, the Daily Mail newspaper by 3,000%, cinema tickets by 2,133%, postage stamps by 2,067% and house prices 1,879%.

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    Compare those figures with average weekly wages that increased from £32 in 1974, to £517 today – an increase of 1,616%.

    The cost of the average house has gone up from £9,927 to £186,544 since 1974. To place that into perspective: it means that the average worker had to work 310 weeks to cover the cost of the average house (without interest) in 1974. Today the same worker has to work 360 weeks to cover the cost of the same house. To put that differently: the monthly mortgage repayment is gobbling up an ever-increasing share of workers’ income. Conuslt a premesis liablity lawyer for expert advice.

    While one could argue that people should be prepared to cut down on cigarettes and entertainment, housing is a basic living expense – and the study shows that it is taking up an ever growing share of the pie, leaving ordinary Britons with less disposable income.

  • New Tax-Free Pensions Could be Disastrous

    New Tax-Free Pensions Could be Disastrous

    A brilliant move that could help to stimulate the sluggish British economy or a mis-selling scandal in the making? The government’s decision to open up pension funds for people over 55 next year so they can withdraw cash from their fund (partly tax free) has elicited mixed responses from industry experts.

    Tom McPhail of Hargreaves Lansdown said: “The chancellor appears to be creating the perfect environment for a mis-selling scandal.”

    The Treasury insists that its decision, which will come into effect in April 2015, will benefit thousands of pensioners who will be allowed to withdraw money from their pension savings as often as they want, with 25% of each withdrawal being tax free.

    calculate

    Tom McPhail, a pension expert, said that while he supported the move, he must also warn individuals that if the money is re-invested in the wrong way it could end up providing very poor returns upon retirement.

    He added that many professionals don’t get it right all the time, so it was inevitable that ordinary investors would get it wrong more often, especially if they acted without a financial adviser.

    Chancellor George Osborne also announced that people would be able to pass on their unused pensions to family members tax-free.

    Osborne went on to say: “We’ve extended the choices even further by offering people the option of taking a number of smaller lump sums, instead of one single big lump sum.”

    From our side we can only warn that using your pension money to get out of debt could prove disastrous in the end. Getting professional debt advice is a much better option.

  • Problem Debt Costs the UK £8 Billion Per Year

    Problem Debt Costs the UK £8 Billion Per Year

    StepChange, a national debt charity, has carried out extensive research on the cost of what it calls ‘problem debt’ – and the results are quite astounding. After studying the files of more than 100,000 of its clients, it calculated that the total cost to the UK taxpayer is in the reign of £8.3 billion per year.

    The charity identified job related problems and housing issues as the two main culprits causing people to get into serious debt. It says the government alone could save as much as £3 billion if it offered better assistance to people with problem debt.

    WORRIED-FAMILY

    StepChange defines problem debt as debt taken on by individuals that they cannot afford to repay as agreed with the lender., and believe this puts severe strain on the country’s employment, mental health and housing systems.

    The single biggest problem that individuals with problem debt often face is having to move to more affordable housing after falling into arrears on rent or mortgage payments. As a result, many then have to be paid housing benefits by the state.

    Next on the list are employment-related costs such as individuals taking time off work because of the stress caused by unmanageable debt, as well as the benefits such people have to be paid if the job is eventually lost. The charity says this costs the country around £2.3bn per annum.

    In its survey, StepChange also accounted for the cost of children being taken into care, divorce settlements and NHS mental health treatment caused by problem debt.

    The debt charity believes that the government should do more to help, but a Treasury spokesperson pointed out that the Money Advice Service already plays a key role in this regard.