What Help Is There When You’re Drowning In Debt?
It’s likely we know when we are struggling with money.
28 October 2021
There are the statements, missed calls from the bank or other lender, let alone the stress we feel. But there is help available, and it’s better to seek it sooner rather than later, writes Tim Barnett, from FinCap.
It’s more common than you think
Many of us are guilty of not being completely on top of our money, or having bad habits. That gym membership you don’t really use, that casual brunch with a friend or that extra bit of data you bought because of your social media habit. Tracking our spending and budgeting is that bit of life admin that we often don’t really get around to.
Then there’s debt. The overdrawn bank account, the credit card you can’t seem to pay off, or that high-interest loan you took out in an emergency. Many solutions involve getting into more debt, like a debt consolidation loan, or transferring balances. You might find yourself in a cycle of taking out more money to pay off your debts. So how can you get help?
Barriers to getting help
Getting help with your finances can be daunting. Our friends and family can be helpful – some might offer to lend you money, or give you well-meaning advice. But sometimes talking to the people we love about money struggles can be embarrassing. They might express judgment at the past decisions we have made.
It is sensible to get independent advice. Financial capability and budgeting services have been around for decades, but they have often been places people go when they are at the end of the line. This means many only get help when they’re about to get their power turned off – or in serious trouble. But getting help early can bring big benefits.
You do not have to be poor to see a financial mentor or a budget adviser. There are many people on reasonable incomes, or with assets, that see financial mentors. Seeing a financial mentor when you first notice you have a problem might stop your situation from getting worse.
What’s a financial mentor?
You can access free help from financial mentors through the government. (Note, these are different from official financial advisers). Financial mentors are trained and skilled to help you figure out your financial situation. They can help you work out the money you have coming in and get a handle on how much you are spending. A financial mentor can help you map out your debts and come up with a plan to pay them off. One of the best services they offer is they can talk to creditors on your behalf, taking the stress away from you.
Benefits to getting help
There are many benefits to getting help with your budgeting. You will get confidential, judgment-free advice about your situation. Another set of eyes on our situation is often the first thing that we need. The experience of financial mentors means they can often shed new light on a situation or provide you options or ways through that you didn’t know existed. If your debt situation is quite bad, they can help you work though insolvency, including No Asset Procedures, plus help with paperwork. A financial mentor might even be able to help you avoid insolvency, by putting together a debt repayment plan.
Where to go
Knowing where to go to get help is the hardest part of the journey. The Ministry of Social Development-funded MoneyTalks is a free financial helpline. MoneyTalks is for anyone experiencing financial stress or hardship. The helpline is run by FinCap, the umbrella organisation for financial capability and budgeting services.
You can contact MoneyTalks by calling 0800 345 123, text 4029, email firstname.lastname@example.org or through live chat at moneytalks.co.nz. The helpline operates from 8am to 8pm Monday to Friday, and 10am to 2pm on Saturdays.
MoneyTalks financial mentors can help you figure out what the next steps are with your situation. They can refer you on to a financial capability or budget service if you need extra one-on-one support.
Mentors, not advisers
It’s important to note that financial mentors are not financial advisers because they work for free for not-for-profits. Financial mentors are best suited to helping you work through a challenging personal financial situation. If you want financial advice that involves choosing products or services, then it is best to see a financial adviser.
First published 12 November 2018
Story by Tim Barnett. Tim is the chief executive of FinCap. FinCap offers support to all budgeting and financial capability services in New Zealand. It provides budgeting services with all the resources they need to help clients safely and confidentially.
This article does not contain any financial advice and has not taken into account any particular person’s circumstances. Before relying on it, we recommend you speak with a financial adviser. This story reflects the views of the contributor only. Content comes from sources that we consider are accurate, but we do not guarantee that the content is accurate.
Informed Investor's content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.