Understanding Debts

For most of our clients, their largest monthly outgoing (expense) is the repayment of their debts.  Many of our clients have multiple debts and not enough income to meet debt repayments.

Adjusting debt repayments can be the difference between a surplus and a deficit.

In this section we will look at some of the options to manage debt that builds on our work in earlier modules.

Attitudes to saving and spending money has changed. It is no longer expected that we save for what we want, but rather use credit so we can purchase what we want now.  We are all subject to a lot of pressure to use credit to ‘buy it now’.

Many of our clients use credit and loans to obtain goods and services before they have saved enough to pay for them.

Many clients use credit or short-term loans to get them through a cash deficit. This is a valid (though not a preferred) method of handling a cash flow crisis.

Clients might use credit cards or loans to get cash for things like food, power and clothing or to pay for services like power, phone, school fees, and medical attention if they do not have a credit account with the provider, or to meet tithing and family loan obligations.

Clients will use credit sales (also known as hire purchase) to buy cars and household goods such as whiteware and furniture.