The cost of living

Sarah: This is the Cost of Living Room, so let’s talk about the cost of living. How is it affecting you?

Emma: I do have to think a lot more about what I’m spending and kind of justify spending it. What’s a priority? Haircuts, holidays, anything that we could cut back on but still be able to enjoy time with our six year old.

Sarah: And do you find that you are using credit more? You are dipping into your overdraft? You are borrowing since the cost-of-living crisis started?

Emma: Yeah, I’d be constantly in my overdraft. If it came to needing something like, say, summer clothes for my little one, it would seem better to do it over buy now, pay later over a couple of months, than have that big chunk of money leave my account all at once. It doesn’t seem as daunting that way.

Sarah: But presumably, before the cost-of -living crisis, you’d have maybe paid for that from your savings?

Emma: Yeah. Where as now it’s kind of just like moving money around every month. So you pay one thing off and then you’ll be taking more, buy now, pay later and then you pay that the next month. So, it’s just getting to the next month.

Sarah: One in three people tell us they’re either in their overdraft at the end of the month, either every month or some months, or they’re having to borrow. And you’ve mentioned about using buy now, pay later. And for some people that works, especially if you’re ordering things online and if you want to send sizes back that don’t fit.

I think the kind of danger with buy now, pay later is you do spend money that you don’t have. You spend more money than you plan to. And the other, of course, is if you can’t pay it back because buy now, pay later is now recorded on your credit file, which it didn’t used to be in the past.

So, I don’t know whether you’ve ever looked at your credit report? You can do it free of charge from the three big credit reference agencies Experian, Equifax and TransUnion, just to see what information is there about you.

Emma: I’ve not looked at it recently. It’s one of those kind of, do I actually want to know and then worry more about it? Or do I just plod along and hope that it gets better?

Sarah: And I think that’s really understandable. People really worry about what’s on their credit report, but the way I look at it is that companies that you owe money to or companies that you might be applying to for credit, whether that’s a pay monthly phone, they’ll see that information anyway.

So, you may as well see what they’re going to see. And if there’s a mistake, you can get information corrected. And if there’s a change in your circumstances that the information is correct, but maybe it’s a short-term blip in your finances, you can add a little note, it’s called a notice of correction. And you just say what’s happened and why maybe that bill was behind, you’re borrowing a bit more, so it can feel a bit less scary when you realise that you can do something about it.

Sarah: Charlotte, Nick. Welcome to the Cost of Living Room. I want to just ask you how the cost-of-living crisis has been affecting you?

Charlotte: I think it’s affecting people in many different ways. But one of the most unexpected things that we found is the cost that it’s having on our health. We’re both healthcare workers from Manchester, so we know the importance of looking after ourselves.

Sarah: We talk about the cost-of-living crisis and it almost feels like it’s just about financial stuff. But it isn’t, is it? It’s about far more. It has that knock on effect.

Charlotte: You know, everything’s just got so expensive now that it’s difficult to buy the sort of foods that we wanted to buy.

Nick: Now we’re just having to compromise and just literally eat the same things. I had a membership at a climbing centre, yeah, that’s a sacrifice I’ve just had to make for the time being.

Charlotte: Just feeling really sort of low in mood and that knock on affects how we are at work. How we’re sleeping, being up at night worrying about things.

Nick: Yeah, I think it’s difficult when your job is predominantly caring for other people and you’re struggling to take care of yourself.

Charlotte: You haven’t got the same energy to get you through a day, let alone get through a long shift. I think if things get worse, we just we really don’t know what we’re going to do.

Sarah: With our own cost of living research, we found that one in three people said they were feeling more anxious as a direct result of the cost of living crisis. But I think there are a couple of things maybe to suggest.

So, one is to have a look at whether your employer offers an employee assistance programme. Now, these often have free counselling or it could be a free phone support line or free online resources.

Charlotte: I think sometimes we maybe don’t ask our employers because we could be a bit embarrassed about the cost of living, about how it’s affecting us.

Nick: Yeah, well, we’ve never been in a position we’ve had to ask for help before, so we’ve never thought about going down that road.

Sarah: And again, your employer, I mean, I had to look at what the NHS offers they have got some online resources around wellbeing, so they offer free access to one of the wellbeing apps. They also offer a government backed impartial money advice service called Money Helper. And if you work for the NHS, you get your own phone line you can contact them on. Now they can’t give you financial advice, but they can give you what’s called guidance. So, maybe tips on where you could save money, including on the cost of living.

Nick: Definitely, we have just muddled through as like, best we can and just found ways ourselves, but we haven’t actually looked for any outside help at all have we?

Charlotte: No, we haven’t. No. So probably would be really useful. It’s really good to know.

Sarah: Give it a go and you know it’s free that help that’s available and some of it is targeted around improving or supporting your mental and physical wellbeing, as well as your finances.

Claire: Welcome to the Cost of Living Room. Can you tell me a little bit about how the cost of living has impacted you?

Brian: I recently became a director due to the loss of a co-director through COVID. And I’ve had to take over the company. Being an importer with a downturn, at the start of COVID we were importing and the cost of shipments went up so much that it literally wiped out the business.

Claire: And has this had an impact on savings and pensions, investments, for example?

Brian: Since, unfortunately, he passed away, I’ve had to draw down from all of my private pension over the last, I would say the last 12-18 months just to be able to meet domestic bills. I recently had substantial rent arrears, and my landlord served me with a Section 21 eviction notice.

Claire: Now when we’re dealing with situations like that, it’s really useful to get in touch with Stepchange and they’re a national debt charity, and they’re really useful. You’ve been talking about issues that you’re having in the here and now and prioritising arrears of bills, and the housing situation is really important. Is that an organisation that you’re familiar with?

Brian: It is, but only recently over the last 12 months. Knowing I can’t handle a number of bills, I would literally just bury them in a drawer, but it reached a point fairly recently where I had a bailiff visit for council tax. At that point I rang Stepchange and Stepchange gave me a lot of very sound advice as to what to do. Once I was able to open up, making them clear on my position, their advice was tremendous.

Claire: And I think you’ve highlighted an issue that many people have had. We find that two thirds of people haven’t asked anyone for help, friends, family, they’ve not spoken to companies or charities. You’ve shown that actually when you asked for help, it’s really made the situation a lot better.

Brian: As I picked up the phone to each company, relayed clearly my current position, all of them were very understanding. All of them, stopped the phone calls, stopped their texts, even on things like credit cards, paused any interest charges. And since that’s happened over the last few months, I’ve actually been able, with a slight increase in income, to come to small arrangements with them all.

Claire: If there’s anyone in your position, what would you say to them?

Brian: I would say don’t keep everything to yourself. That everybody’s understanding. There are people that care and there are certainly people that will help. I’ve been too proud to do that over the last year or two to the extent of not even sitting down with my partner and making her fully aware of the current position. Once I made her aware, although it felt embarrassing, it was actually a major relief to me, and we’ve been able as a team, the two of us to start to tackle things in a proper way.