How much debt do you have?
Most of us are managing debt of one form or another, but often we don’t appreciate the scale of it, or the variety. It builds up – a store card here, a credit agreement for a new computer there – and before you know it, you’re in trouble.
Take me for instance, which we should, as I created this blog especially so that I could be the centre of attention at all times. I don’t think of myself as having a lot of debt; I don’t have a mortgage, I’ve paid off my student loans, (woohoo!), and I don’t have any store cards. Brilliant! And then I remembered that I have a few thousand pounds left on a loan from when I bought a new car a couple of years ago. Not so debt free now am I? And then there’s my new Mac, which I bought on credit a couple of months ago – I have 10 months left to pay that off in full. Oh, and I have a couple of credit cards don’t forget – they don’t have much on, but maybe a couple of hundred pounds each. And then there we are, approaching the £5,000 mark, without even trying.
My point is that debt can creep up on us, and it’s very easy to get in trouble without even realising it, which is why PayPlan have put together a very simple online test to see how well you’re managing your debt and to help you spot any danger signs. PayPlan has been offering free, comprehensive advice, guidance and support for anyone struggling with debt since 1992, so they know what they are talking about.
You know I love a test, especially if it involves a certificate, (which this one doesn’t I’m afraid, but that’s no reason not to make your own), so I got stuck in.
You can take the test yourself here. Do it now, and then come back so we can compare results.
Now, from my answers, things are looking good. I’m not having any sleepless nights worrying about money, I’ve not missed any payments, and I certainly don’t dread the post arriving – I love getting post!
However, there was one question that did really make me stop and think. It asked ‘If you lost your job tomorrow, would you be under immediate financial strain?’
Now I work for myself, so I can’t actually lose my job, unless I give myself the sack, which would be a bit cruel, but my income is far from guaranteed, and something could easily happen that would mean I was unable to work, such as illness. What would I do then? I’d be screwed quite frankly. I may not have lots of debt, but I also have a distinct lack of savings to match, and I rely very much on money coming in on a day to day basis.
While the test showed I was in control of my debt, it did make me realise that this is very much down to luck as much as anything else, and that I need to put some sort of plan in place to make sure that if anything did happen, I would at least have some time before I had to panic. Budgeting more effectively, and including something in my budget to build up a contingency fund, would be a good first step.
So, spill the beans, how well did you do in the test? What do you feel are your areas of weakness financially and what could you do to improve your situation?