Editor’s note: This is a no-nonsense list of action to take when you have no money at all by Sara Williams: a fellow UK personal finance blogger and a passionate advocate for a fairer debt system..I hope you never find yourself in a desperate situation where you must take these actions; if you do, use this post as a check and reference list. I give you Sara Williams, a CAB volunteer who blogs about debt and its possible solutions on Debt Camel, her website.
What should you do when you have no money at all? Not a ‘can’t-afford-to-go-out-on-Friday’ problem; I’m talking about having £6 in cash, two kids and no more money coming in for the next two weeks. I’m talking about not having money at all.
Perhaps there have been benefits delays or errors, perhaps your ex has left and emptied the joint account, perhaps you have started a new job but don’t get paid until the end of the month. Millions of people in Britain are only one paycheque away from an emergency.
You are in a predicament. You can’t see a solution or a way to feed yourself and your children over the next two weeks. Desperation, mingled with guilt and shame, washes away your last grains of energy. The end game, you think.
There is no place for shame and guilt, no room for despair. Anyone could fall on hard times. What matters when you have no money is not what happened or where you are now; what matters is what you do next.
What you must do next is to achieve a degree of ‘stability’. You need to ensure there is money for basics. Next, you must learn to see the rest of your life as a road trip, not like a gate to the fire pits of Hell.
I can’t help but change your perspective on life. I can make it easier for you to find a level of stability by giving you a list of options for people who have no money.
Some of these options aren’t nice, but look at them all, as none may work for you.
What to do when you have no money at all?
#1. Make a list of all the food that you have
Check the cupboards, fridge and freezer. If you have UFOs (Unidentified Frozen Objects), then this is the time to defrost them and enjoy! Then make a list of the meals you can make with them, even if these are boring or rather odd. Of course, this only works for a week or two, but we are talking about getting through a crisis here.
#2. Check the back of the sofa for money you misplaced
Look in all the places where some notes or change may be lurking: any old purses, pockets of coats you aren’t using at the moment, a spare pound in the car for supermarket trolleys etc. Do you have any foreign currency or an odd traveller’s cheque left over from a holiday?
#3. Visit a food bank
To get food from a Food Bank you need to get a voucher first. This could be from various support agencies such as your local Citizen’s Advice Bureau, doctor, health visitor, social worker, Job Centre or even the police. If you are meeting any of these in the next few days, ask about a referral to a food bank. I recommend going to Citizen’s Advice because there you may get help with your underlying money problem and a food bank voucher.
I visited my local Food Bank a few months ago and wrote this Behind the Scenes article about it. That tells you what sort of food you are likely to get and may reassure you: food banks are friendly places and you will be made welcome, even if they are based in a church hall and you have no, or a different, religion.
#4. Short-Term Benefit Advance
If you have applied for a means-tested benefit such as JSA, ESA, Income Support, Maternity Allowance or Pension credit and it hasn’t yet been paid, you should ask at the Job Centre for a Short Term Benefit Advance. There is a complete list of the benefits covered here. The decision time for STBAs is quick – you should hear within 3 working days.
This loan will be deducted when your benefits start to be paid. Because it isn’t a benefit in its own right, there is no form to complete (!) and no publicity about this, so don’t be surprised if you have never heard of it! If the Job Centre refuses to allow you to apply, ask your local CAB for help.
#5. Local Welfare Assistance Scheme
These have replaced what used to be called Crisis Loans. They are meant to help with essentials for people leaving prison or care or fleeing domestic violence; provide goods to help people with disabilities with independent living; enable families to replace broken white goods and essential furniture; and enable vulnerable individuals to afford food and heating.
What you can get will depend on what area you are in – find your local scheme here.
#6. Budgeting loans
If you have been on JSA, ESA or Income Support for more than 6 months, you may be able to get a budgeting loan. These are interest-free loans that are repaid by deductions from your benefits. They would say, let you replace a fridge or a broken washing machine. If you are eligible, this will work out much cheaper than a commercial loan or by going to “rent to buy” rip-off shops such as Brighthouse.
#7. Stop non-priority debt repayments
Credit cards, unsecured bank loans, payday loans, doorstep lenders – these are all “non-priority” debts. You won’t lose your house or go to prison if you don’t pay them, so if it’s a choice between repaying these debts and food or heating, then the debts just aren’t important.
Suppose you have large debts for your income. In that case, debts may indirectly be causing the current crisis by preventing you from putting any money aside for an emergency or leaving you so short you can’t manage things like children’s uniforms or car insurance. Consider talking to a good debt charity such as National Debtline or StepChange about what your options might be. This may not solve the current crisis but it may prevent the next one!
#8. Stop paying bills
This is getting into seriously scary territory. It’s best to talk to a debt advisor before you decide you have to do this. Not paying utility bills, rent, mortgage, and council tax is storing up major problems for the future. And never, ever drive an uninsured car.
If you are 100% certain you can pay the bill in a week or so and aren’t already in arrears, you may want to consider this. But be very, very honest with yourself – if you have to pay this bill late, are you going to be in just as much difficulty next month? And make sure you really are looking at an emergency – your child’s birthday may feel urgent, but getting council tax arrears is not the solution.
#9. Sell stuff?
Unwanted clothes, old DVDs, toys the children have grown out of, old mobiles – this is a good thing to think about, but it may not get you money fast. It could be another way of preventing the next emergency, not solving this one.
#10. Credit Union loan
Even if your credit cards and overdrafts are at their limit, you could try talking to your local credit union. They tend to take a less rigid “Computer says No” approach than commercial lenders; see this case study. That doesn’t mean you will get a loan if they feel sorry for you, but they will look at your whole situation and whether you can repay it.
You may be wondering about other borrowing – isn’t this what payday loans were invented for? No, they were invented to make a lot of money from desperate people. Payday loans, Amigo (guarantor) loans, logbook loans – all these sorts of “bad credit” lending are extremely expensive and also hard to extricate yourself from. And never consider borrowing to repay an existing debt – that is, getting yourself trapped in a bad downward spiral.
Oh, and one last thing. Your employer may be able to help – it may be possible to have a conversation in confidence with your HR department? Are you a member of a church? Swallow your pride and ask a relative. If you or your partner are ex-forces, contact SSAFA.
Finally, the actions when you have no money at all
Having no money at all, of most crises in life, is probably the hardest one, and it cuts deep. How you see it is not simply that you failed; being unable to feed yourself and your family makes you a failure.
This is not the place to argue whether you are correct. Instead, I offered you information on what you can do when money is extremely tight. You have options, you can crawl out of this. Some of the actions open to you may seem humiliating – no one likes to live on charity, right?
Work through the fear, shame and humiliation. Now you know what are the options open to you when things are so bad that you have no money at all. It is time to focus on this knowledge and put it into action. Go and check your cupboards and freezer. Search your pockets and old jars for forgotten cash. Take yourself to the Job Centre and pick up the phone. You can do it; I know you can.