Sara Williams is a debt adviser in London, England. She set up her personal website, Debt Camel, five years ago, wanting to provide good information about debt in a more approachable, easy to read manner than official debt advice websites. She now blogs about everything to do with debt and credit ratings in England, from improving your credit score for a mortgage to asking for a payday loan refund for unaffordable lending. Her aim is to answer common questions with as little jargon as possible.

 

Welcome!

 

[2:6] In the US one of the biggest debt problems is student loans, what does the typical millennial struggle with in the UK when it comes to their money?

• Didn’t used to be a problem at all back in the day, however 20 years ago the loans started coming in
• 10 Years ago they really started getting high
• Typically you only need to pay what’s affordable
• Some advisors believe it puts off a lot of people from wanting to go to university

[6:16] What is a debt management plan and how does it work?

• Get a list of all income, expenses and debts
• Calculate disposable income from subtracting your fixed expenses from your income
• You can then start snowballing you debts
• However if you can’t manage your minimum payments, at that point you need a debt solution
• The debt management solutions goes to the creditor asking to pay less (typically freezing the interest)
• It’s flexible so you can adjust amounts

 

[11:6] We emailed you a while back about negative equity in a car loan and you said it works quite differently in the UK. What are some of the things you can do if you’re given a car loan with unaffordable finance?

• This is an increasing problem in the UK, some cars are bought on higher purchase
• PCP purchases are now becoming more common, there is typically a large balloon payment at the end, they have to return the car at the end
• There are some protection in British law- after you have paid half of the available credit you can often hand back the car

 

[17:16] A debt hole people fall into are payday loans, do you have any solutions for people that get stuck and have to keep borrowing to repay their old loans?

• Was a huge problem in Britain, if there’s an expensive thing to cover people take out payday loans and people get stuck in a vicious cycle where they keep using the loans to finance the old loans.
• The new regulator has reduced the amount to about 1000 APR
• The regulator has capped the amount of interest people can pay to 100% of your loan value
• A lender has to check whether a loan is affordable for you, this must be repayable for your income without financial burden, you can typically ask for a refund of the interest you have paid
• If you borrowed for 5 months in a row, the lenders have to now cut you off

 

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Value Link Round

 

[25:4] What are some of the steps you’d take if you were starting to setup a sound retirement plan?

• A lot of pension planning in the UK is orientated around your job
• There are defined benefit schemes and defined contribution plans
• Auto-enrollment has now been brought in (5-4 years ago)
• Currently 8% is now being put in, which is great but it depends on your age how effective this will be

 

[28:31] Do you have a favorite book?

• No book recommendation as most people aren’t buying books
• Check out good websites instead if you’re in debt

 

[29:40] Favorite quote you like to live by?

• “Nobody ever made a greater mistake than he who did nothing because he could only do a little.” ~Edmund Burke

 

[30:44] Any other parting piece of guidance?

• The rules do seem to be quite different in different parts of the world so definitely do your research

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