PAYDAY LOANS: RECENT MEDIA COVERAGE

Lots of stuff about payday loans in the media just recently. I’ve mentioned on my Twitter feed that the subject was featured in “Broadcasting House”, one of my very favourite programmes on BBC Radio 4, yesterday morning.

I thought that in several ways the programme presented a balanced view. Rather than simply saying “these loans are terrible and should be banned because of their outrageously high interest rates”, at least one interviewee said that the amount paid (and it’s generally small, as it’s generally on smallish loans) could well be less than what the bank would charge you for going into (unauthorized) overdraft.

A fair point and another reason why people would be tempted. I’d previously said in my last post (at the back end of last week) that these kinds of loans could be considered in emergency, provided you also put a plan in place which ensures that you repaid the loan at the next payday .

High interest charge … or a bank charge? Maybe both

However, there is a comprehensive article on this by Matthew Wall in ‘Moneywise’ magazine (November 2010). The article points out something else, which adds a further danger to what’s already known about these kinds of loans.

He says: “Lenders usually take your debit card details as part of the application process so they can take out the full repayment come payday. They’ll do this whether you have the money in your account or not, potentially pushing you into overdraft and triggering bank charges if you don’t.

In this situation it’s a double whammy; you’ve paid the payday loan company’s interest rate (which is well known to be very high) but then you are stung with the bank change anyway.

Matthew Wall goes on:

If you can’t repay the full amount you can ask to defer the loan, but they’ll usually insist you at least pay the borrowing charges.

There may also be a deferral fee or a charge incurred for arranging the new loan. So it’s not hard to see how cash-strapped borrowers can quickly become submerged in debt.”

Want to know more?

1. To see the whole of Matthew Wall’s article, go to: http://www.moneywise.co.uk/cards-loans/personal-loans/article/2010/11/03/beware-offers-easy-credit

2. My book “Back to the Black: how to become debt-free and stay that way” is available on the Smashwords site. To sample (first 20% free) or to buy at only $3.99, go to http://www.smashwords.com/books/view/22886

PAYDAY LOANS: FRIENDS IN NEED OR WOLVES IN SHEEP’S CLOTHING?

Earlier this year, during an interview on Heart FM, I was asked about payday loans: would I advise anyone who was especially cash-strapped (for example as a result of Christmas), to take out one of these loans? This is a tricky matter: anyone considering any such loan must have exhausted all other possibilities.

Payday loans, usually for sums up to £1,000 ($1,500), are known to carry very high interest rates. Those rates could be affordable if it's the only game in town AND if the loan really is repaid quickly, i.e. on payday, but if it's rolled over then the problem starts. However, they are marketed as being instantly available, which of course is very attractive when things are tight.

Advantages

So the attractions are:

• Instant availability, even if you have a poor credit record
• Lack of bureaucracy, with a simple application method
• The fact that it’s cash: a cheque is less useful if you have to pay it in to a bank account with a maxed-out overdraft, though of course cheque / cash converter shops have foreseen that problem.
• The fact that it’s local, with a collector who probably lives near you.

If there is no alternative, and if the sum borrowed is repaid at the next payday, then paying that interest (high rate but small sum) is better than having to default on the mortgage or a credit card bill.

Disadvantages

The problem arises, of course, if the sum isn’t paid quickly. Then, of course, it will become more and more difficult to repay, because of that very high interest rate. I could publish a table showing how the sum owing would build up at those very high interest rates: but that would be very depressing for you and for me.

Should you do it?

In the radio interview I said that if anyone was in a situation where they saw no alternative solution, then they should take the loan, provided they immediately got help from one of the debt advice charities, for example the CAB (Citizens Advice), or CCCS (Consumer Credit Counselling Services), or National Debtline, or one of the many local “not-for-profit” debt advisory services, and put together a plan. Step one of that plan must be to repay the payday loan as a first priority.

I still stand by that advice.

Those interest rates, by the way

In order to check my facts after that interview, I found a website that lists the top 5 payday loan providers (the “top 5” ranking is by “rough estimate of lender’s approval rates”). I found the APRs of these lenders varied from over 990% to over 2300%. Eye-watering stuff, if you can’t repay quickly.

For extra info see the MoneySavingExpert website, for example this post:
http://www.moneysavingexpert.com/news/loans/2010/01/loan-sharks-leaving-victims-in-debt-all-year . That article talked about interest rates (APR) “up to 1500%”. As you can see above, I found some rates to be even higher.

Credit Unions: an alternative

Credit unions are an alternative and much cheaper source of short-term finance that people in this situation could look at: an alternative, in fact, to high-street lenders as well as to payday loans.

The local one here in Bristol, for example, is at http://www.bristolcreditunion.org/; they offer loans from £100 to £7,500 ($150 to $11,250). Their website says: “By law credit unions cannot charge any more than 2% per month on the reducing balance of a loan. This represents a maximum interest rate of 26.8% APR (Annual Percentage Rate), and that is the most you will ever pay on your loan.”

Worth checking out? 26.8% sounds better than those payday loans.

Taking advice

If you are in debt, and whether or not you are considering a payday loan, I always bang on about the need to get help as soon as possible. That should preferably come from an independent, impartial (i.e. not-for-profit) advice service such as the local CAB (that’s the Citizens Advice Bureau, for the benefit of any readers of this blog who are not in the UK) or CCCS (Consumer Credit Counselling Service) or National Debtline. Then you need to formulate a plan with the help of that advice, and inform the creditors that is what you're doing and ask them to freeze interest while that's happening.

Many creditors will agree to that, but if you don't ask you don’t get. Many debtors spend too long in denial and they don't communicate with their creditors, which makes the situation worse. I know: I was one of those.

In fact my book’s subtitle could even be “Learn from my mistakes”.

Christmas is coming!

At the top of this post I mentioned Christmas. This is a good time to say that one way of avoiding payday loans is to cut down spending. Don’t cut down on the fun but do cut down on the presents!

As I say in my book: “Christmas is not an emergency.” (it comes every year)

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"Back to the Black: how to become debt-free and stay that way", is now available as a multi-format eBook at Smashwords to sample (view or download the first 20% free) or to buy at only $3.99. Go to: http://www.smashwords.com/books/view/22886

Website: www.back-to-the-black.com

Blog: http://backtotheblackblog.wordpress.com

DEBT COLLECTION: OFFICIAL GUIDELINES IGNORED

An interesting article by Jenny Little (“Moneywise”, Nov 2010) reminds me of a problem that can cause great misery for personal debtors. The Office of Fair Trading (OFT) has a ruling that prohibits harassment of debtors. Moreover the OFT clarifies what constitutes harassment by publishing guidelines; however, many lenders ignore them.

According to the article, in some cases lenders have even claimed to be unaware of the guidelines, though it’s the OFT that issues those same lenders with their consumer credit licences.

To see the article, go to: http://www.moneywise.co.uk/cards-loans/credit-cards/article/2010/10/25/credit-card-demons-revealed

Little says that “growing numbers of people struggling with credit card payments complain of creditors bullying them with menacing letters, doorstep visits and threats of court action or repossession.

“In public, credit card and debt collection firms pay lip service to official guidelines protecting consumers, but staff are given financial incentives to recover debt, provoking the sort of harassment that makes millions of debtors' lives a misery.”

Official guidelines

OFT guidelines require lenders to negotiate with third parties, e.g. debt management companies, and say that debt collectors must give advance notice of visits. Debtors can also request not to be contacted at work.

Debt collection firms pretending to be bailiffs, or falsely threatening criminal proceedings, also risk being fined or having their credit licence revoked.

The guidelines in full:

Physical/psychological harassment: putting pressure on debtors or third parties is considered to be oppressive. Examples of unfair practices are as follows:

• contacting debtors at unreasonable times and at unreasonable intervals
• pressurising debtors to sell property, to raise funds by further borrowing or to extend their borrowing
• using more than one debt collection business at the same time resulting in repetitive and/or frequent contact by different parties
• not ensuring that an adequate history of the debt is passed on as appropriate resulting in repetitive and/or frequent contact by different parties
• not informing the debtor when their case has been passed on to a different debt collector
• pressurising debtors to pay in full, in unreasonably large instalments, or to increase payments when they are unable to do so
• making threatening statements or gestures or taking actions which suggest harm to debtors
• ignoring and/or disregarding claims that debts have been settled or are disputed and continuing to make unjustified demands for payment
• disclosing or threatening to disclose debt details to third parties unless legally entitled to do so
• acting in a way likely to be publicly embarrassing to the debtor either deliberately or through lack of care, for example, by not putting correspondence in a sealed envelope and putting it through a letterbox, thereby running the risk that it could be read by third parties.

Source: Office of Fair Trading, “Debt collection guidance: final guidance on unfair business practices.”


Lenders ignoring guidelines

But it seems the guidelines carry little weight with the lenders, according to Little. Heather Keates, chief executive of Community Money Advice, says: “Card firms are jittery and increasing interest rates. Creditors now go in hard from the outset.”

Citizens Advice (CAB) gives the example of one client’s recent experience. A 42-year-old single mother, she was struggling to keep up with a £7,000 credit card debt on her £589 take-home pay. She made the minimum payments but, when she defaulted, her bank began to phone her up to six times a day, even at work.
When the CAB intervened, the bank’s representative claimed to know nothing of the OFT guidelines and blamed the repeated calls on an automated system.

Automated dialling systems

Little has found that the use of automated dialling systems is commonplace and can result in customers receiving multiple calls every day. Some people resort to buying an extra pay-as-you-go mobile just to avoid harassment.

Alex MacDermott of Citizens Advice said: "It's always better to talk to the card provider; otherwise your number will stay in the automated dialler, which will keep ringing. But the tone of some calls can be very threatening."

Mention of telephone harassment and automated dialling reminds me of my own experience when I was in debt. That’s why I say: “try to avoid talking to creditors by phone. Don’t ignore them; respond to the messages … but in writing. Let all your incoming calls go to voicemail, if you are single-minded enough to do so.”

While some providers employ in-house debt collection, others 'sell on' debt to a third party. The Consumer Credit Act requires that they first issue a default notice to customers who have skipped payments to inform them which company has taken on the debt but in my experience this rarely happens.

The OFT has criticised debt collection agencies for “making frequent phone calls, threatening court action and not describing the process correctly", and has also concluded that many default charges are unlawful. It says that £12 is the maximum that anyone should be penalised for missing a payment.
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What to do

As I say again and again in my book: get help, especially if you are being harassed. Apart from the three major national debt advice charities Citizens Advice (CAB), Consumer Credit Counselling Service (CCCS) and National Debtline, there are also Community Money Advice and Debtors Anonymous, as well as Consumer Action Group, which is an online support network. All of these are easily located online. There are also local advice centres, too numerous to mention.

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“Back to the Black: how to become debt-free and stay that way” is now available to sample or buy, as a multi-format e-book, at: http://www.smashwords.com/books/view/22886

HOW DO WE MEASURE GROWTH?

I loved the contribution by Caroline Lucas, our only Green MP, on “The Week in Westminster” (BBC Radio 4) yesterday (13.11) morning. I am not a supporter of her party, nor am I that well informed on the green agenda, but every time I hear her speak I am impressed. She talks a lot of sense; moreover in a courteous way, even when confronted with the leading questions beloved of interviewers, such as this one: “ … are you not coming to the conclusion that you alone can make no difference …?”

The Commons had been discussing economic growth; Ms Lucas wanted the debate to be wider but felt she was the only MP who believed we should look at the quality of growth. She went on to say: “How useful is GDP as a real measure of that growth? Are we better off?”

I agree totally. To take solely the relationship between GDP and jobs, I wrote in a blog post on 27 October, when a higher-than-predicted monthly GDP growth was in the news: “However … a growth in GDP does not necessarily – and quickly – improve the lot of the majority of people in this country, particularly those who are already in debt or who face losing their jobs as a result of the recently-announced spending cuts. Our economy is still rather dependent on relatively non-labour-intensive sectors, e.g. financial services, so today’s good news is “necessary but not sufficient”.

Can you measure happiness?

So Caroline Lucas asks, “are we better off?” Back in “the good old days”, i.e. before the credit crunch and the recession, there were several studies (including those quoted in Oliver James’ famous book “Britain on the Couch”) showing that British citizens’ self-perceived levels of happiness (or contentment or well-being, call it what you will) had not increased over the previous 50 years even though, by every financial measure, we were indeed all greatly “better off”.

OK, let’s leave aside this hard-to-measure or even impossible-to-measure quality of happiness, or maybe the spiritual wealth of the nation if you like. Are there other measures than GDP with which we could assess the economic wealth of the nation? I don’t know the answer but I’d love to hear your views.

UK plc as a company: turnover? profit? What else?

For example: years ago, when I was in the chemical industry, I remember an Irish customer of mine saying, as his annual financial results were published: “Turnover is vanity; profit is sanity.”

Isn’t the GDP of a country somewhat analogous to the turnover of a company, being the sum of its outputs? So what might be the equivalent of profit for “UK plc”? What measures of “added value” could we track?

Obviously our government is supposed to do more than deliver profit to shareholders, so how best can it – and we – measure how good a job it is doing? As Ms Lucas’s question implies, GDP is not the only measure.

“Answers on a postcard”. As they used to say, back in the day.

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For a link to Caroline Lucas’s interview on “The Week in Westminster”, go to: www.bbc.co.uk/programmes/b00vv0dv#p00c4mrs
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For information on “Back to the Black: how to become debt-free and stay that way”, go to www.back-to-the-black.com

UK PERSONAL DEBT TRENDS

My thanks to the charity Credit Action for their latest credit data.

Previously, on my blog …

The last time I blogged about this, I reported that the “write-off rate” on consumer lending by UK monetary financial institutions to individuals increased further in the second quarter 2010 to 7.4%. In that quarter, UK banks and building societies wrote off £3.47bn, most of which was credit card debt.
Secondly, Credit Action reported that average household debt in the UK was £8,590 (excluding mortgages). They went on to say that “this figure increases to £17,896 if the average is based on the number of households who actually have some form of unsecured loan.”

That second statement puzzles me; I don’t agree with the idea of giving a second average that includes only those who have debts. An average is an average, including the highs and the lows and everything in between. If we exclude those with the very lowest debts (i.e. zero), then we should also exclude all those with the very highest debts, i.e. all of the “outliers”.

By the way, if one included mortgage debt, then average household debt in the UK was then about £56,690.

The report concluded that total UK personal debt at the end of August 2010 stood at £1,428bn, a slight increase.

Now for the update

The latest Credit Action report, which I received last week, still gives the second-quarter figure for the write-off rate on consumer lending, i.e. 7.4%; presumably the third-quarter figure is not yet available.

Total lending in September 2010 rose by £0.4bn; secured lending increased by £0.1bn in the month; consumer credit lending increased but only by £0.3bn. (a step-change from pre-recession days: total lending in Jan 2008 grew by £8.4bn)

Total consumer credit lending to individuals at the end of September 2010 was £216bn. The annual growth rate of consumer credit increased 0.3% to 0.6%.

Average household debt in the UK is ~ £8,562 (excluding mortgages). Again, they add, “this figure increases to £17,838 if the average is based on the number of households who actually have some form of unsecured loan.” Again, I find that second figure rather artificial.

Total average household debt in the UK (including mortgages) is approx £57,737; that’s an increase but only a very small one.

Your debt or the country’s debt?

If you thought that figure was highish, the report goes on to say that “if you add to this the March 2010 budget report figure for public sector net debt (PSND) expected in 2015-16 (excluding financial interventions) then this figure rises to £109,960 per household.” Sorry, but that is rather a jump of logic; the PSND is not my personal responsibility, although I would indeed be worried if I thought Mr Osborne would send the bailiffs round to ensure I cough up my share of the UK debt. Thus I feel this excellent report is slightly compromised by making the raw data appear worse through this addition.

And another thing … that last calculation is based not on current government borrowing but the projection for 2015-16; a lot can happen before then. “Things can only get better”, as the song says; at least I hope they will. Let’s hope, in particular, that the PSND in five years is lower than that prediction.

Back to the present

Finally, and if we deal solely in current and personal realities, total UK personal debt at the end of September 2010 stood at £1,455bn; as you can see, that’s a further slight increase. Based on their latest report, the people at Credit Action can still make the same statement that I quoted in my book “Back to the Black”. In their words: “Individuals owe more than what the whole country produces in a year.”
It is sincerely to be hoped that this worrying statement will be short-lived, and that GDP will continue to rise and personal indebtedness will start to fall.
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To find out more about my new book “Back to the Black: how to become debt-free and stay that way”, go to www.back-to-the-black.com

ECONOMY GROWING FASTER THAN EXPECTED BUT PERSONAL DEBT WORRIES PERSIST

The UK's economy grew at 0.8% between July and September according to official figures from the Office for National Statistics (ONS). That growth is double the 0.4% expected by most analysts.

"This is the second major GDP growth surprise in a row and suggests that the UK economy is more resilient than many had feared," said James Knightley, economist at ING.

"The government will no doubt take this as a sign that the private sector can fill the gap created by public sector cuts, but with consumer confidence, hiring intentions surveys and housing activity data all softening we remain cautious."

The key is that phrase “hiring intentions”. I am a glass-half-full person, so I like to focus on the facts that the GDP increase is double what was expected and that it’s the strongest third-quarter figure in a decade, according to the BBC’s Stephanie Flanders.

However … a growth in GDP does not necessarily – and quickly – improve the lot of the majority of people in this country, particularly those who are already in debt or who face losing their jobs as a result of the recently-announced spending cuts. Our economy is still rather dependent on relatively non-labour-intensive sectors, e.g. financial services, so today’s good news is “necessary but not sufficient”.

Until those “hiring intentions surveys” also show a rise, there will still be large numbers of people going into bankruptcy or taking out an IVA (a Protected Trust Deed in Scotland).

I too was in that situation not so long ago. However I found another way, which I detail in my book “Back to the Black: how to become debt-free and stay that way.”

What is also encouraging is that construction seems to be showing the strongest gains in the last couple of quarters, as this would lead to job creation more than some other sectors.

To quote Stephanie Flanders again: “There is still plenty to worry about in this recovery: much of it beyond our shores, and beyond the government or the Bank of England's control. But for today at least, I think we're allowed to join the cabinet in a sigh of relief.”

Here’s a link to that Stephanie Flanders piece: http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/10/good_news_on_gdp.html

If you want to know more about how I personally escaped the threat of bankruptcy and IVA and found another way, go to www.back-to-the-black.com

CONSUMER CONFIDENCE INDEX

Nowadays, consumer confidence is taken as an even more important barometer of the economic health of the UK than is any index of industrial output. That’s why it was rather depressing to read this morning that confidence is at its lowest level for more than a year, according to a monthly confidence index published by the Nationwide Building Society. This drop is, of course, in anticipation of the spending cuts to be revealed in the Comprehensive Spending Review next week.

Experts at the British Retail Consortium predicted that the figure would be “volatile” until after the impact of the cuts was known, which seems to me “a PhD in the bleedin’ obvious”. However when we actually look at the numbers, I wonder how meaningful is this “index” and the media coverage it’s had. The September index was reported by the BBC to have dropped by 9 to 53 in September. Thus a drop of 15%. In a month. By contrast, it rose 10% in August. Can both figures really be true? Of course I realise that recent announcements of planned cuts could have prompted a drop this large; however I have looked at the Nationwide website and it’s clear that this index fluctuates greatly almost every month. It was only 45 a year ago; moreover it was 100 only a couple of years before that, at a time when the credit crunch was already well underway. Surely a more meaningful measure of confidence is actual retail sales?

This is clearly a case for study by BBC Radio 4’s excellent programme “More or Less”, which looks more deeply at numbers in the news, especially when they might have been misrepresented (Can that really happen? Shock, horror!). Naturally, most of us know only what the media tells us about the impact of the cuts. For example, I thought I read at the start of the process that the spending reductions would be spread over 4 years or so; however, we never hear that fact nowadays. Whenever the media talk about, say, 25% cutbacks in departments that are not being ring-fenced, the stories give the clear impression that the cuts and the resulting job losses will be more or less immediate.

A related example: one of our allegedly serious papers carried an interview last week with a single mother who would be seriously affected by the recent decision to restrict total benefits payments to UK average income. The article clearly stated that Ms X would have to consider a move out of London, away from family and friends, “within the next couple of months”. However the benefit limit decision will not be effective till 2013; a fact that was not mentioned in the story. Why not? Could this omission be because bad news sells papers? Am I being too cynical?

Here’s my point: the tendency of many media outlets sometimes to oversimplify and usually to paint the worst possible picture of any new development adds further to the stress on people who are already in debt or who think they might be in the future. It’s important to put things in perspective and that’s something that’s hard to do after reading some of our doom-and-gloom media coverage. As that old French philosopher said (at least I think he was a French philosopher, but my information comes from the media), “my life is full of great disasters, most of which never happened”.

If you have concerns about your own debts, read my book “Back to the Black” about the necessity of putting your financial situation in perspective before deciding your response to any demands from your creditors; or any piece of bad news you read in the press.

BBC RADIO BRISTOL INTERVIEW NOW ONLINE

My interview on BBC Radio Bristol is now online at the "Audioboo" site: http://audioboo.fm/michaelmac43

UK DEBT STATISTICS SHOW WRITEOFF RATE INCREASING

The latest UK debt statistics, courtesy of Credit Action, show two interesting trends.

Firstly, the “write-off rate” on consumer lending by UK monetary financial institutions to individuals increased further in the second quarter 2010 to 7.4%. In this quarter, UK banks and building societies wrote off £3.47bn, most of which was credit card debt. In the 12 months to the end of August, they wrote off £10.9bn of loans to individuals.

Secondly, they reported that average household debt in the UK is ~ £8,590 (excluding mortgages) but this figure increases to £17,896 if the average is based on the number of households who actually have some form of unsecured loan. That’s a drop from £22,000 when I last looked, about 6 months ago, which shows clearly that people have been paying off debt.

By the way, if we include mortgage debt, then average household debt in the UK is now about £56,690.

The report concluded that total UK personal debt at the end of August 2010 stood at £1,428bn, a slight increase. Based on that, the people at Credit Action still make the statement that I quoted in my book “Back to the Black”. In their words: “Individuals owe more than what the whole country produces in a year.”

"BACK TO THE BLACK" - RADIO INTERVIEW

Yesterday (23 Sept) I did an interview about “Back to the Black” during Graham Torrington’s mid-morning show on BBC Radio Bristol. I can’t attach the file here, as it is too large, but the interview is available on the BBC site until 29 Sept.

"BACK TO THE BLACK" HAS ITS OWN BLOG

Last week I flagged up the fact that my new book "Back to the Black" is now available in a variety of e-formats on the Smashwords site: http://www.smashwords.com/books/view/22886

I also announced that the book has its own website: www.back-to-the-black.com

Today I have also set up a dedicated blog on the Wordpress platform: http://backtotheblackblog.wordpress.com where I'll be posting any new developments with the book, plus news related to debt, and inviting discussion.

Watch that space!

"BACK TO THE BLACK" UPDATE

Yesterday I was working with Jenny Layton, who's giving me fantastic help with the text-editing of Edition 2 of "Back To The Black", i.e. the complete content as an e-book. I am still hoping we'll get the file uploaded by the end of February.

After that the next project will be a podcast and an audio version of the complete book.

This morning I did another interview with Heart FM, this time with Rob Mayor. This came about because Heart felt that the issue of "Payday Loans" needed exploring further. We talked about why people are tempted by such loans, the benefits on which they are sold, and the well-known disadvantages of the astronomical interest rates. Those rates could be affordable if it's the only game in town AND if the loan really is repaid really quickly, i.e. on payday, but if it's rolled over then the problem starts.

We talked about credit unions as an alternative to high-street lenders or to payday loans.

I also stressed the need to take advice, preferably from an independent, impartial (i.e. not-for-profit) advice service such as the local CAB (Citizens Advice Bureau, for the benefit of any readers of this blog who are not in the UK) or CCCS (Consumer Credit Counselling Service) or National Debtline. Then the need to formulate a plan with the aid of that advice, and to inform the creditors that is what you're doing and ask them to freeze interest while that's happening. If you don't ask you don’t get, but many debtors spend too long in denial (and I was one) and don't communicate, which makes the situation worse.

All this is the kind of advice that most people have read lots of times; however, my hope is that when the complete book is published, people will view the advice in a different light because of what I say about where I went wrong. In fact the book’s subtitle could even be “Learn from my mistakes”.

"BACK TO THE BLACK" UPDATE

Belated posting about another radio interview, following the launch of the free edition of “Back To The Black”.

This was with Heart FM in Bristol, (formerly GWR FM Bristol) who sent their reporter Chas Rowe to interview me at home. The station had told me that clips / soundbites from the interview would be broadcast during their news bulletins last Monday, i.e. 18 January, aka “Blue Monday”. This is a day which has apparently been “scientifically proven” to be the most depressing day of the year. Heart FM said that the launch of my book was a good news story they’d like to run on that day, which was encouraging to hear.

Apart from the questions I’d expected, was one about payday loans: would I advise anyone cash-strapped at the end of January to take out one of these loans? This is a tricky matter: anyone considering any such loan must have exhausted all other possibilities. These loans, for sums up to £1000, are known to carry very high interest rates but they are marketed as instantly available, which of course is very attractive when things are tight.

If the sum is repaid very quickly then paying that interest may be better than having to default on the mortgage or a credit card bill; the problem arises however if the sum isn’t paid quickly. I said that if anyone was in a situation where they saw no alternative solution by month-end, then they could take the loan provided they immediately set in place a debt management plan, e.g. with the help of Citizens Advice, or CCCS (Consumer Credit Counselling Services), or some other local independent debt advisory service, and then repaid that loan as a first priority.

For the record, an online resource lists the top 5 payday loan providers ranked by “rough estimate of lender’s approval rates”. The APRs of these lenders varies from 994% to 2339%.

For extra info see a posting on the MoneySavingExpert website:

http://www.moneysavingexpert.com/news/loans/2010/01/loan-sharks-leaving-victims-in-debt-all-year

Finally, credit unions are an alternative and much cheaper source of short-term finance that people in this situation could look at. Here in Bristol (UK), for example, they can be found at http://www.bristolcreditunion.org/ and offer loans from £100 to £7500. Their website says: “By law credit unions cannot charge any more than 2% per month on the reducing balance of a loan. This represents a maximum interest rate of 26.8% APR (Annual Percentage Rate), and that is the most you will ever pay on your loan.”

BACK TO THE BLACK: RADIO INTERVIEW

Today I was a guest on the drivetime show at Bristol’s community radio station BCfm, (link here for website), being interviewed live by Station Manager Phil Gibbons about “Back To The Black”. Although I had been a presenter on the station for much of last year, it was a new and pleasant experience being a guest. For a start, I didn’t have to pay for my coffee this time. Seriously though, who doesn’t like being asked questions about a topic in which they are interested?

My interview was interspersed with two others: with Neil Innes and Michael Palin, no less! This was because the station was running a live outside broadcast from Bristol’s Colston Hall, where both were about to perform in the city’s Festival of Slapstick. Phil said I could now dine out on the fact that I’d appeared on a chat show with these two luminaries; and that they “kept cutting across my airtime!”

Phil asked a very good question about one of the tips from my book. I’d mentioned some of the basic stuff about communicating with creditors, making an offer, etc, and he pointed out that those tips could be obtained in other books, websites, etc. “People know that’s the thing to do” he said, “so why don’t they do it?” My answer was that people like to read stories rather than to be told what to do, so the fact that my book’s advice is interspersed with the story of my own debt problem and how I worked my way out of it, will hopefully make people more likely to act on the tips given.

Phil wrapped up the interview by wishing me well with the book: “Hope it makes you rich – no, sorry, that’s not the point. I guess your point is to stop other people becoming poor”. To which I readily agreed.

In fact the Free Edition of “Back To The Black: how to become debt-free and stay that way” is available as a free download, in .pdf format, at www.scribd.com/michael_macmahon

BACK TO THE BLACK: MEDIA RELEASE

Here’s a copy of a media release I'm circulating today, regarding the launch of “Back to the Black.”

MEDIA RELEASE

Date: 18 January 2010

From: Michael J MacMahon

For immediate release

Subject: New book launched: helping debtors get “Back To The Black.”

AUTHOR INTERVIEWS AND PHOTOS AVAILABLE

___________________________________________________

Summary:

An author who faced bankruptcy shares what he learned and reveals the key questions that can help individuals deal with debt.

___________________________________________________

A new self-help book for people with debt problems has been launched today. “Back To The Black: how to become debt-free and stay that way” is based partly on the author’s practical experience of escaping bankruptcy and partly on the principles of coaching. Chapters 1-3 in their entirety are now available as a free downloadable file, at www.scribd.com/michael_macmahon .

The book’s author, Michael J MacMahon, says: “A few years ago I survived a major financial crisis. While digging myself out of that hole, I became interested in the principles of coaching, especially the idea that most people have the knowledge and resources to solve their own problems, if only they get the right support. One of the best ways of providing that support is to ask the right questions, because questions help to focus thinking, especially at times of stress; and being in debt is certainly one of those times. The book is thus derived from my experience and also demonstrates how those key questions can help anyone get out of debt.”

The book has been favourably reviewed by debt advice experts at the UK’s Citizens Advice organisation. Some of the best advice is simple practical stuff, for example:

• Start by listing all your debts, bank balances and assets: knowing the truth is better than a vague feeling of threat.
• Communicate with creditors: the problem gets worse if you ignore it.
• Make an offer: any offer, no matter how small, is better than none.
• Never negotiate on the phone: do it in writing; it’s less stressful.
• You don’t need to be alone: get help from a debt advice organisation.
• Keep records of all communications: it pays dividends.

BOOK LAUNCH: "BACK TO THE BLACK"

The free download version, containing Chapters 1 - 3, of my book “Back To The Black: how to become debt-free and stay that way” is now available as a .pdf file.

It's on the social publishing site Scribd.

Click on this link, or copy and paste this URL into your browser:

http://www.scribd.com/michael_macmahon

It’ll also be available on other sites soon. Watch this space!

"BACK TO THE BLACK" - MEDIA RELEASE

Here’s a copy of a media release I’m in the process of circulating, regarding the launch of “Back to the Black.” Watch this space for updates.

MEDIA RELEASE

Date: 5 January 2010

From: Michael MacMahon

Subject: New book helps debtors get “back to the black”

AUTHOR PHOTO AND INTERVIEWS AVAILABLE

______________________________________

A new self-help book for people with debt problems will be launched this month. “Back to the Black: how to become debt-free and stay that way” is based partly on the author’s practical experience of escaping bankruptcy and partly on the principles of coaching. A substantial extract becomes available as a free downloadable file on 18 January and the complete e-book will be available in February.

The book’s author, Michael MacMahon says: “A few years ago I survived a major financial crisis. While digging myself out of that hole, I became interested in the principles of coaching, especially the idea that most people have the knowledge and resources to solve their own problems, if only they get the right support. One of the best ways of providing that support is to ask the right questions, because questions help to focus thinking, especially at times of stress; and being in debt is certainly one of those times. The book is thus derived from my experience and also demonstrates how those key questions can help anyone get out of debt.”

The book has been favourably reviewed by debt advice experts at Citizens Advice. Some of the best advice is simple practical stuff, for example:

• Make a detailed analysis of your financial situation: no matter how bad, it’s better to know the truth.
• Communicate with creditors: the problem gets worse if you ignore it.
• Make an offer: any offer, no matter how small, is better than none.
• Never negotiate on the phone: do it in writing; it’s less stressful.
• You don’t need to be alone: get help from a debt advice organisation.
• Keep records of all communications: it pays dividends.

ENDS

NOTES FOR EDITORS

The book

The first release of “Back to the Black: how to become debt-free and stay that way” will be an abridged e-book, available free of charge from 18 January 2010. The complete publication will be released as an e-book in February: prices depend on format but average below £5. Audiobook and paperback editions will be available later.

Weblinks for the free download will be published on 18 January. For updates, see the author’s blog: http://michaelmacmahon43.blogspot.com/

The author

Michael MacMahon is a freelance writer and voiceover. He was previously a managing director in the chemical industry and then ran his own training business. He lives in Bristol.

CONTACT DETAILS: interviews, photos etc:

Michael MacMahon

Tel: 0117 973 8420

Mob: 07905 138701

E: mail@michaelmacmahon.co.uk

Blog: http://michaelmacmahon43.blogspot.com/

BACK TO THE BLACK 2

In my last post I said I had decided to write a book about my debt experience and what I had learned from it; and that I had decided to self-publish, first as an e-book.

I’ll be blogging about the topic too. One of the obvious advantages of this form of publishing is its immediacy and flexibility and the way one can link to other sources of information. Thus I’ll certainly aim to signpost people who want advice on debt problems, to helpful websites and blogs. Here are two absolute “musts”.

1. Martin Lewis’s massive site is always worth looking at, especially his “Debt-free wannabe” section: http://forums.moneysavingexpert.com/forumdisplay.html?f=76

2. The Motley Fool website is another well-known resource for financial advice of all kinds and they have a “Dealing with Debt” stream among their discussion boards: http://boards.fool.co.uk/Messages.asp?bid=50079

BACK TO THE BLACK

A few years ago I hit a financial crisis. I had a business which, after five very promising years, had begun to stagnate. I had turned a blind eye to the problem and came very close to bankruptcy. With the help and support of friends and of a few professionals (one of whom happened also to be a friend) I was able to avoid that, and eventually came through the experience without permanent scars to my spirit or credit rating.

Later, I decided to write a book about the experience and what I had learned from it. My book would be written from the perspective of someone who had been there, had the problem and found a way out of it.

After spending a lot of time over the past two years trying to get a deal with mainstream publishing houses, I have now decided to self-publish the book. It will be available first as an e-book; later, depending on demand, as a paperback and an audiobook.

The e-book will be available early in the New Year. Its working title is “Back to the black: how to become debt-free and stay that way.” If you’d like to be advised by e-mail when it’s available, please post a response on this blog.