Dealing with debt

Debt coupleAnother headline about debt recently was how 4 million people owe almost £130 on their energy supplies.  


Do you think that people decided to owe money?  


Apparently a third owe more than they did a year ago and less than a tenth owe less.  Not surprising, because apparently the average bill is up £53 on the year (to £1,265) and up £793 (172%) on ten years ago.


Obviously, reports confuse the maths because they quote fractions and percentages (but not both) the first time they mention the figures so it’s difficult to compare one with the other.  Then they don’t quote either percentages or fractions and just give figures, which means the information is presented in about four different ways and unless you’re quite good at maths, you lose track of what the real facts are.  I’m never sure whether that’s for dramatic impact, because nobody involved actually understands how to work out percentages from figures (or vice versa) or what percentages are as fractions, or possibly that they’re deliberately trying to confuse people.  But I do know that most people reading the reports are unlikely to have a clear understanding of all the figures.


Because nobody really understands it, comments such as “despite knowing they could reduce their bills by moving to a cheaper energy plan, many see debt as a barrier to switching”, go without comment.


I’d want to ask – “how do you know the reason that people don’t switch is seeing debt as a barrier?”.  And, “so what reason do the other people, who don’t see debt as a barrier, have for not switching or even better asking for more useful help?”


And if people are so clued up that they know about switching, know it might be a problem if they have debt to pass over and therefore may need to get help or clear the debt before they switch, why don’t they have enough clue to:


  • Get a loan to clear the debt (is it really going to be so hard to borrow £130?)
  • Work out that “with a difference of more than £300 between the cheapest and most expensive tariff on the market” they could get back that £130 in about five months.
  • Find a cheaper tariff that doesn’t hamper them just because they have a debt, or arrange to pay off the debt with the new provider.
  • Get some of the help from the Department of Energy and Climate Change, who say “support is available to vulnerable households”.


The point is that people don’t make decisions logically.  Even the people who think they are rational and make “logical” decisions, don’t.  Human beings simply aren’t like that.


There can be all sorts of reasons people don’t switch, and I doubt that working out rationally that having existing energy debt might be a problem is in the top 100.


The top half dozen reasons are  going to include shame at being in debt at all, feeling stupid for not knowing how to deal with a common feature of modern life, embarrassment at having to ask for help, and confusion over the choices involved and the conflicting advice they are given.


It would be a lot more useful if people were helped to understand that everybody feels they “ought” to be:


  • logical,
  • able to make rational decisions if faced with multiple options,
  • a responsible adult and able to cope with all of life’s challenges without any problem,
  • never be “weak” or ask for help,


And it would help to teach people that in fact, we’re all human.  That means that, in fact:


  • nobody is logical,
  • nobody can really deal with more than about three choices without having to simplify the options and take short-cuts,
  • everybody wants to think they are at least as smart as average and fears they aren’t, 
  • everybody wants to be seen (and to see themselves) as a responsible adult and doesn’t want to admit that they can’t cope sometimes,
  • everybody thinks that seeking help is a sign of weakness,
  • everybody thinks that “other people” have got it sorted and will laugh at or despise anybody admitting they are scared, in debt or confused. 


It would be great if the message would go out that people are human.  And instead of banner headlines about problems and how help is available, with speculation about why people don’t act logically or use the information available, we started to teach people what being human means, and help them to deal with their reluctance to seek help and actually solve their problems.







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