The Punch Secret of Debt Management

Update - 17 March 2010

I sent additional information to the benefits office 2 weeks ago. I haven't heard anything since, so I have just called them to find out about the progress. Turns out, the information has still not been processed. The person on the line apologised and told me they'd look into everything in the next couple of days.

Seriously, folks, this is ridiculous. I have the problem, and I want you to be concerned about it.

Original post - 12 March 2010

You know that you need to change something in the way you do and think about things when you realise that what you don't want in your life comes your way a bit too often.

I realised recently that I keep attracting some hardships my way. Don't get me wrong: I don't expect to get through life without any problems at all. But be it unsatisfactory jobs, wrong people to get along with, or the so-called "negative customers", I keep getting them with alarming regularity. 

I think I know what I need to do to change this course; but in the meantime I've been dealing with the consequence of some of the above "negative experiences". I'm not going to tell you how hard it can all be: those who are in the know don't need reminding, and I hope those who haven't got a clue will never get it. However... what has been happening recently was quite astounding. Below are some of the findings I've made. 

In bank we trust? 

I do my banking with one very reputed bank. In fact, back in 2007 when I had no credit history in the UK (i.e. no bills, credit cards, etc.) this was the bank that eagerly opened a current account for me. Unfortunately, at the moment there is an overdraft. And, unfortunately for me, the bank controls my money. 

In early February I was paid my tax return. To avoid it covering my overdraft and hoping to use it to manage my other bills, I asked the Inland Revenue to transfer the money into my savings account. Together with money from other work it was nice to see the sum growing. 

Three days later I was £155 short of that sum. The bank transfered the money, without informing me, into my current account, towards the overdraft repayment. Before we go on, even though my reserve used to be £150, the overdraft was £365. We're not talking about a huge sum of £2,000 here. But the bank can and will take control of my money, as it was claimed by the bank and by several other services. 

This put the strain on my finances once again. Rather than questioning how I can carry on trusting my bank, I have a different question. Instead of protecting its financial interests, why cannot the bank protect me as their customer? The banker surely has seen that I was trying to use my savings account to actually save money. The good customer service would be to contact me to identify the problem. But, obviously, nobody contacted me, and I've only learnt about the action post factum. 

The interesting thing is that, as I was told by the Consumer Credit Counseling Service, repaying a bank's overdraft is not classed as a priority payment. And the bank in question is fully aware of this, especially because the CCCS claims to have a good relationship with them. 

How to kill a bill

Dealing with bills is never a pleasant thing, but all the more so when you're not entirely free with money. I'm quite proud to say that I dealt very maturely and professionally with BT operator: I explained that I cannot pay their bill in full, although I am happy to make a token payment. However, if BT disconnects me from broadband they are going to jeopardise my work, and so, thanks to BT, I will have more problems than I already have. The only thing I am waiting for now is the confirmation letter of this arrangement, and this is something that BT, banks, and many other services could do with improving. It takes them so long to post the bill that by the time it arrives into my mailbox I have virtually two days to pay it. Same for correspondence. How good is that for customer service? 

A burglar civil servant who respects his art always takes his time before taking anything else (paraphrase of O'Henry). 

Anyone who's ever had anything to do with civil services will understand why I chose this phrase. In fact, as we know, every department takes its time before taking anything else - like, say, taking care for your problem. At the moment, I am waiting to hear about some financial help I may get, but it looks like it is going to take some time and just a tiny bit of my nerves. 

Similarly, today I received correspondence from another bank where I am trying to open an account. I visited them last Tuesday, I posted my form on Tuesday evening, and just today - a week and a half later - I received an envelope with my form and a note asking me to send in a copy of my ID. They cannot process my application otherwise. Why could they not call me, or send for the information promptly? Customer service? Nil points. 

Getting help... 

In situations like this you want help, of course. Reluctantly I rang CCCS because I needed to understand how I could manage everything. Where should I start? We discussed budgeting, payments, and the conclusion was: don't pay anything yet, send token payments, and save money. 

Sounds like a good plan to me. Except one thing: how do I explain all this to the services where I owe money, and how do I control anxiety and emotional overwhelm that inevitably accompany this situation? CCCS brilliantly explains the first question: what I can do (say, write, etc.), what action is likely to ensue from my creditors, what counteraction I can take, etc, etc. As far as anxiety and overwhelm go, it is clearly my task to scout the web and bookstores in search for self-help books. This may not be such a bad thing, after all. 

And the secret is...

This is exactly the Punch secret of debt management. Because I don't owe more than £15,000 I am not eligible for debt reconciliation. This may be good news, but saving money will take time because I still need to pay my current bills. Even though the debt is by no means huge - just a little over £2,000 - I am just as likely to be persecuted as a person who has been consciously evading tax or illegally claiming benefits. Sadly, so far I could not get a loan anywhere, including my bank. 

The secret is also in the fact that, with all help that you may be able to get, it does not come instantly, and it is likely to be more in the form of advice than anything tangible. 

How do I feel about it all? Strangely calm and confident. I know that the situation in which I have found myself has to do with choices and circumstances of the past. I cannot change them, but I need to focus on my future. Which is why I have been actively exploring the opportunities for extra paid work. I am now more than before open to freelance work, although I have already got some projects on the go. I am in a good company now, but I need to work extra to get myself out of this situation as soon as possible.

It is futile to give advice on how to not get into debt, and we'd still manage this state of things in our own way. One thing I would say, however, is that it is important to talk and to negotiate conditions suitable for you. This may sound strange but my confidence has been growing massively since the start of the year. I was never particularly inconfident, but making a deal with the bank, estate agent, or BT over the phone or email is a completely different thing. The thought I have in my head now is this one: if I can take control of these huge companies and make them concede in my favour, how much more can I do?