Physician Heal Thyself

"I don't care who they are. I treat everyone exactly the same" Oh the lies we tell ourselves! Most of us have thought this but the number of us for whom this is actually true is tiny. What's more it's probably a bad sign if you do. A sign of a boorish lack of empathy. Do you really treat a hyperactive school child like you do an elderly grieving widower? Really?

What's more we don't always react to people as they are but as we expect them to be. So our various prejudices and preferences both malignant and benign affect how we treat others. Whether it's preconceptions about race, gender disability or whatever or whether it's subtle quirky issues such as smell or patterns of speech.

But what we often forget is that most of us have a whole other set of rules again for how we treat ourselves. Not that I'm saying we're all hypocrites. Just that a lot of us have a code of 'normal' behaviour to which we hold others and then we have a slightly different code of behaviour to which we hold ourselves.

This has disturbing implications. For example it's a common problem that people beat themselves up about small slip-ups that they would tell a friend to forget immediately. Okay most people are aware of that possibility. There's another level to it though as well. What about the areas where you let yourself off the hook but you would expect another to be better than you.

For example, I have a deep hatred of housework and really have to steel myself to do any at all. I expect other people's houses to be clean and tidy but I let myself make excuses. Or do I? It occurred to me earlier this year that perhaps I didn't let myself get away with it at all. That secretly I was still quite disgusted by last week's dust and yesterdays washing up. Perhaps this wasn't actually balancing out the times when I was strict with myself. Perhaps I was just masking the self-judgement when acting on it seemed too unpleasant.

So the solution came to me that I needed to balance out these external and internal standards. To do the bloody dishes and not be so hard on myself about trivial slips of the tongue.

Good for me but what about financial capability? Well, it seems to me that people who end up in debt who haven't been through a serious income shock often do so in part because they hold themselves to a higher standard of material generosity than they hold others. I'm not knocking generosity. The world would be a sadder place if we all kept a constant tally of who showed which kindness to whom.

Still, I helped a loan sharking victim to write his budget a few years ago. He was on a middling income and it was hard to see how he'd ended up in so much trouble. Until he looked at what he had left after he'd paid for the essentials and exclaimed "Now I understand why all my friends are so tight!"

It turns out he'd been buying extra rounds, bigger presents and so on than the rest of his social circle and judging them for not putting in as much as him. He even tried to shame them into spending more with his conspicuous giving. His view of friendship was that it involved spending on your friends and he had never realised that he was holding himself to a higher standard of friendship than he held his mates. (He didn't actually drop them for not giving him enough back.) That was until he was confronted with the reality that they were only spending their own money and he was spending other people's.

This story makes the poor fella look a bit stupid. Of course he wasn't stupid, he just never made the connection between his actions in the moment and his financial status as a whole. At each small spending point his beliefs about correct social behaviour overrode his need for financial wellbeing. A lot of the value of financial capability interventions is giving people the time and space to evaluate their financial decisions from a more objective, holistic point of view. It is valuable to ask whether they are behaving in ways that they would not expect from others, including sacrificing their peace of mind and physical security on the altar of debt in order to show their friends and family a good time.

Looking back, looking forward

photo by musya on www.sxc.huLast year was an interesting year here at LTC. I realise looking back that I didn't blog much of what I'd actually been up to.  So here's a little of what really happened in 2010 and thoughts for 2011.

My friends at One Housing Group and I made their residents feel, in their words, "inspired and empowered". The groups at One Housing were mostly older women from black and minority ethnic communities, a group the Runnymede Trust says are particularly vulnerable. I went to their launch event on BME comminities and retirement at the Houses of Parliament in the summer. If you have information about this issue you should get in touch with Omar Khan at Runnymede because this is important and fascinating stuff.

Sadly that partnership is at an end but it was fun while it lasted. I have been wotking with One Housing for several years and most of those who were really intersted in the course had attended by the time we finished.

Between that, my work with the Armenian group, and my ongoing project with (mostly African) HIV organisations in West London (thank you Hammersmith and Fulham CAB!) it was a year of expanding my knowledge about how other cultures view money and the British financial systems.

Overly complex with nitpicking, loophole-filled contracts and lousy, impersonal customer service seems to be the consensus. Oh the shame. I would say that within this context the most useful thing I've done for anyone is tell them about the regulatory bodies and outline the best way to make an effective complaint.

People used to a culture of personal negotiation and common sense flexibility find the churning of call centre staff and the implacability of corporations even more exhausting and dispiriting than the rest of us. Without the sense of entitlement that comes from knowing that your not being treated badly because of your race but because the person at the other end of the line is a jobsworth it's much harder to fight your case determinedly.

The conventions of a well-made complaint and the names and addresses of the next places to turn if you're still getting stonewalled seems to be a subject for which participants were most hungry. It's also one that can spread virally very easily and about which I have the least fears of half-understood advice being passed on by overly-enthusiastic participants. I'm thrilled by the thought of large numbers of grumpy old women holding the banks and utility companies to task. That's something I'd like to see much more of in 2011!

I became an associate at the Centre for Resposible Credit and spent much of March on the train travelling to and around Manchester to facilitate focus groups on debt and job-seeking behaviour.  Our main conclusion people are desperate to work but won't do it if it doesn't make financial sense. Or to phrase it another way, people in poverty are hard working and not stupid. I'll be talking about that research this Friday to a forum of trainers who help long term unemployed people back to work. I look forward to their responses.

The Responsible Credit Convention was a real eye opener. I formed an unlikely alliance with financial capability sceptic Prof. Toni Williams and had a rant about the demonising of the owners of 'big screen TVs' (in pounds per hour they are a very, very cheap form of entertainment). I didn't have a rant about the other delegates' constant moaning about consumerist 'young people'. For which read young-people-who-are-more-targeted-by-more-cynical-well-funded-well-researched-and-downright-ubiquitous-advertising-than-any-other-generation-that-ever-lived. Perhaps I should have done. Perhaps that's a blog post for another time. But then I think I just said it all.

I learned to deliver debt advice training, thanks to Anne O'Connell in Newham Council and to Sharon and John at Community Links. It was really fun and I'd like to do more of it. I got things done with Roxanne Persaud @Commutiny. I also contributed to the slick and stylish new edition of "It All Adds Up" the resource for Macmillan Cancer Support. (Cue fangirl fluttering on being involved in a project with the awesome Jonquil Lowe.) Roxanne and I will be getting more things done this year and I hope bigger and more exciting things. Watch this space for fabulous new projects.

Finally, I've been lots of fascinating fora and met lots of wonderful people doing amazing work. You're all inspiring and empowering me and I'm grateful. I wish you all a fantastic 2011!

Legal Fail

I was going to write a jolly little post about how I had more in my credit union account than expected when I checked yesterday. (See, paying in by standing order when all your other bills go out works people! Also yes, I directly support my credit union, I don't just advocate it to other people.) Then I checked the news online this morning and saw that debt advice is no longer covered by legal aid and I felt physically sick.

Credit Action's November debt statistics are out now and can be found here. For those who don't have time to click through (and I recommend you do) here are some headliners:

• The CAB is dealing with 9,000 new debt problems daily.
• Average personal debt now stands at 127% of average earnings.
• Every 3.78 minutes someone is declared bankrupt or insolvent.
• Every 14 minutes a property is repossessed.
• 1,000 people seek some form of formal debt rescheduling every working day 
• 1,567 people are being made redundant daily

So we have a growing number of people who will be unable to meet their commitments and a high level of personal indebtedness and what does the government do? Remove legal aid for debt advice.

I want to get this out quickly so I won't search around for the number of debt advice services that will fold, the clients that they currently serve etc but if anyone knows and wants to tell us in the comments that would be superb.

I know that debt advice is unglamorous and doesn't pull that heartstrings like parents being denied access to their children. Here's the truth, people kill themselves over their debts. They begin misusing alcohol and other drugs to cope with the stress, they are tempted to crime*, they fight with or even break up with their partners, and sometimes they kill themselves. The average citizen of this country doesn't have a clue about how to negotiate their debts and is frightened by threats of court action and the stigma of bankruptcy. They leave things to get out of control before they ask for help. When that help is then stretched to breaking point and we already have 6-8 week waiting times so you could say we're already there, accidents will happen.

People in debt, most of whom have not managed their budgeting badly but have had a change of circumstances for which they were not prepared, are vulnerable to harrassment by bailiffs and debt collectors. Most are not aware that under Section 2 of The Protection from Harassment Act 1997 this is a criminal offence, but debt advisors are and can put a stop to it.

The amount of misinformation about debt and debt solutions is huge. There is a growing marketplace of private sharks selling inappropriate and overpriced individual voluntary agreements and expensive (instead of free) debt management plans. These will only increase and with them the number of avoidable bankruptcies and drains of cash from the already poor and vulnerable to the financial institutions and ambulance chasers. Oh and the divorces and deaths. Let's not forget them.

I know I sound like I'm being melodramatic. In amongst the other injustices that the withdrawal of legal aid will herald this is only one way in which life will get harder. Still let me give you an example of why this matters. Running up debts and stealing money is a common way in which controlling and abusive men punish their partners for trying to leave. That and the ever popular threats of murder and suicide. But apparently that's a "private matter" and if he never hit her, or she can't bring herself to press charges over the physical violence, she'll get no help with either the theft of her money and trashing of her credit record or with sorting out the debts.

That'll teach her for attacking The Traditional Family, eh?

*You can't be a security guard if you have a poor credit record.

Life on the edge

Image by johngard on www.sxc.huI was at the Responsible Credit Convention last week, which was a fascinating event all in all, even the occasional disappointing bit was interesting in the specific way that it disappointed. (I'm thinking of a certain plenary speaker with a virtually content-free talk that still managed to utterly miss the point. Hint: it's not about middle class students over-spending on their credit cards.)

After two days of stimulating discussion my main take-away was the need to rethink our handling of the informal economy. This borderline world of cash in hand work and unregulated saving is worth around £12bn a year according to Community Links and yet it is largely ignored, or dismissed by policy makers as evidence of inherent criminality amongst people in poverty.

Mistrust of authority and institutions came up as a sticking point in addressing financial inclusion and irresponsible lending issues time and again. Whether it's unregulated savings schemes within BME communities or the low take up of support from Trading Standards by victims of loan sharks or the way in which pay day loan and rent-to-own companies use 'no credit checking' as a selling point meaning 'no official records', the swathes of people on low incomes who have good reason to stay under the radar and are willing to pay over the odds to do so is a serious issue.

The timing with the announcement of the Comprehensive Spending Review is impeccable. I haven't yet had a chance to analyse much of the new benefits provisions, although I'm pretty scared by what I have seen, but ultimately the key thing that needs to be done urgently is a means by which people on low incomes can accept small pieces of irregular work without losing their benefits. I doubt if, for all Iain Duncan Smith's noise, the DWP has achieved this. Until this is possible then desperate benefits recipients will continue to commit low level 'fraud'* to make ends meet and will refuse to engage with other services including regulated financial services for fear of being caught.

Tax reform that redresses the marginal tax rates of low income workers is also a major factor in the informal economy. I would love to hope that the coalition was smoothing out those bumps and making taxes fairer, simpler and more progressive but since they wrote of Vodafone's £6bn tax bill while simultaneously taking a hatchet to public services I think there's scant chance of that. An unfair tax system will be evaded more than a fair one. When low income workers, particularly the self-employed see that Vodafone getting away with £6bn it's no wonder they transfer a little of their own work into the record-free zone.

The informal economy costs everyone. It costs the country in lost taxes by supporting a cycle of tax evasion whereby the less well off justify their own avoidance/evasion by looking at behaviour of the rich, and then having evaded themselves feel they do not retain sufficient moral high ground to challenge large scale, systematic corporate evasion. It costs the DWP in expensive 'fraud' investigations and unnecessary trials. It costs the criminal justice system as it facilitates the operations of loan sharks providing them with borrowers and makes gathering evidence against them harder. It costs the employees in poor conditions, low wages and exploitation about which, as they should not be there, they have no recourse. It condemns the poor to a world of shadows and recriminations where their neighbour may phone the fraud hotline over a slight and yet the only place to save or borrow is with a trusted friend. But who can they trust?

Community Links have done some great work on the informal economy here, check it out.

*Actually the hardworking and entrepreneurial spirit that government and many media sources berate the poor for lacking.

An inside view on debt online

While much of my knowledge about how people  behave around money comes from what they tell me in workshops, there are some things that most people will not discuss in a group setting and I don't get much time with my participants one on one. When I was first learning about personal finance and people's attitudes towards their finances I got some amazing insights from online debt self-help fora such as The Motley Fool's Dealing With Debt board and Money Saving Expert's Debt-free Wannabe board.

These are great places to learn how people end up in debt, how they feel about it and what they do about it (apart from going to see a debt adviser). Online anonymity allows people to let go and make a full confession, not to mention give their real feelings about the mess they're in and how they got there. Of course it only covers a certain self-selecting portion of the population (higher income, more literate and web-savvy debtors). Still it shows how problem debt can happen to anyone given a serious income shock, as well as how long people can go on in denial and quite how bad they feel when they do decide that they can't continue alone any longer.

Many of the regular posters are qualified debt advisers on a busman's holiday and MSE has a specific thread for posting directly to CCCS counsellors. Others are former debtors who've been helped by the communities. The fora are usually very friendly and supportive (some of the others on the Fool are pretty hair raising) and people return over and over to post updates on their progress, tell the stories of their bankruptcy hearings and do 'happy dances' when they pay off a debt in full.

The only times when flames ignite are when someone blatantly pops up spamming the board to advertise their paid debt advice service, Or iif debtors seem to be wilfully ignoring the advice of the board or seem not to have 'had their lightbulb moment' (realised that you can't spend the same pound twice). Then of course tough love is in order and some posters can be pretty outspoken. Still it is just tough love and doesn't descend into the kind of spite you see on some internet boards.

These fora are a fabulous source of budgeting tips of course but also shows the changes that people can make in their financial lives. Better yet from my perspective it gives an insight into the problems of for example spendthrift partners, judgemental families, pestering kids and peer pressuring colleagues and some creative solutions. Debt and how to survive it. Fascinating stuff.