Question Time: Homeless to Homeowner- what next? Debt making me ill.. help! Save, or pay on 0% card? Close old accounts?

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1:49Martin Lewis:Let's see what we can do. I have never seen a debt problem that isn't solvable. I'm not saying it's always easy or quick, but I think we can get some light at the end of the tunnel. Homeless to homeowner, amazing. Yeah. I just wanted to say thank you for everything you do and I'm sure there's a lot of other listeners who also feel the same way. Hello and welcome to the comingly named The Martin Lewis Podcast. I do wonder what that's going to be about. And this is the Question Time episode where you get to ask me your questions on absolutely anything and everything. Open brackets within reason, close brackets.

2:22Martin Lewis:this week the first question is from someone in debt and that debt is having a very serious impact on her mental health and she wants to know how she can get help then the next question is a beautiful tale of moving from homeless to homeowner and she asked me now we've bought a house what do we do next after that it should i use buy now pay later or a zero percent purchases card or just save up for my new telly. Then I've got open current accounts I don't use, should I close them? And finally, Martin, what's a totally normal thing that you've never done? Play the theme tune.

3:18Martin Lewis:Hello and welcome to this week's Question Time episode. Yes, you can ask me anything and everything you like, as I always say. Now, regular listeners get prepared for a shock. We don't have Matt this week. Replacing Matt, so he can't be the curator of questions, I'm going to call him the questions dude, because I think that sort of fits. We've got PPS, podcast producer Simon is with me this week. Welcome to Question Time, Simon. It's your debut. Yeah, delighted to be here. when matt was off they wanted someone good looking witty charming who could cover him sadly weren't able to find that person but you know i was delighted to get the call and you're in luck because i've been able to warm up broadcast wise i went for a walk around salford keys early so i work in media city here in salford but like this salford university is kind of on the same campus yeah and some students stopped me to like do some vox pops they were kind of so really Did you say, I work at the BBC, I know what a vox pop is?

4:14Well, no, but I gave them the perfect answers because I have been in that exact position. Oh, I hated vox popping.

4:19Martin Lewis:Once I started my career, I hated vox popping. Well, yeah. Approaching people and asking, oh, and you get so many of these funny looks. So well done you on that. Yeah, I had a lecturer who used to sort of always, I don't know if he just wanted to put his feet up for an hour, but he would always just sort of send us out in a, come back in an hour with a story and off we would go. it's interesting because you you edit the um the main podcast that we do and often you send it to me to have a listen to and then i give you my feedback and you always say to me i'm not going to do your accent i want to do that i got scared i'll go for a walk around salford keys while you and then while you're waiting while you're listening so is it you just go around you go around the docks do you there's a loop that i often do yeah depending on how much time i just i hate spending all day inside yeah um and today i'm a step obsessed so yeah yeah so any opportunity to get outside, I will take it.

5:06So there's a couple of loops that I do depending on how much time I've got. But yeah, there were some students lurking.

5:11Martin Lewis:So now you all know that we have Loopy Simon with us, everyone, and he'll be here for the whole podcast. Right, let's get on with your first question. What have you got for me? Yeah, it's a really interesting one, this one. We've actually changed the name. We're going to call her Jane because it's quite a personal email that she sent us. She says, I know you'll get thousands of these emails each week. I am struggling with debt of around £7 ,000. I was let go by my job last year after 25 years of service. I'll be very honest, I've attempted to take my own life twice due to the situation, I just don't know where to start to get help.

5:42There are so many companies saying they will help, but they just charge you and that's money that's added to the debt. I've tried to contact Citizens Advice, but they're impossible to get hold of and even after emailing, they do not get back to me. I would appreciate any advice you could give me because I feel like I have nowhere to turn.

5:58Martin Lewis:Oh Jane, I'm so sorry, I really am but let's see what we can do. I want to start by saying you are not the only person who has felt like this and feels like this and I'm so sorry to say and I hope this isn't triggering for everyone but unfortunately financial problems are one of the biggest triggers for suicidal ideation and so you're not alone and in a good way you're not unusual and I want you to understand that this is this is common and this happens and there are paths and ways that we can get out of it. And as long as I've been doing what I've been doing, I have never seen a debt problem, whether it's from gambling or whatever else, that isn't solvable.

6:35Martin Lewis:I'm not saying it's always easy or quick, but I think we can get some light at the end of the tunnel. So the first thing to say is we will get there. And absolutely, there are some wonderful organisations that can help you. You've spoken to Citizens Advice. If they're busy, that's a problem. And if you would like to talk to them, I can probably, through Simon, get your contact details if you're willing to, and we can probably put you through to someone there. But probably in your circumstances, if I can be really honest, when it comes to debt counselling, there are two types of agencies. There's your Step Change, Citizens Advice Bureau and National Debt Line.

7:11Martin Lewis:And I should note, everyone I will mention is non-profit. They are there only to help you, not to judge you, not to make money out of you. They're just there to try and work through what's the best solution for you. Those three, they're what I would call the functional debt counselling agency. So when you go to them, you'll present your finances and they will work it through with you. Like, you know, you might go in another stage of your life to an accountant or you might go to a lawyer, someone you need to have functional advice that says, this is what we need to do. How do we structure it? How do we organise it?

7:42Martin Lewis:How do we make it work? And then there is another service called Christians against poverty and it is of a religious base but I tend to phrase it and some of the people who do it they are religious and they do like to pray and we'll be straight on that but most of what they're about is trying to help people because they are Christian not trying to only help Christians so you don't need to be a practicing Christian to go to them the difference between Christians against poverty and the others is they spend a lot more hours with you and they are engaging in emotional counselling at the same time.

8:18Martin Lewis:They're there to sort of, it's more holistic. It's not just your finances. It's also looking at your wellbeing as an individual and as a human when you go there. So if you're comfortable going with an agency like Christians Against Poverty, I think certainly when clearly the debt that you've had has had a profound impact on your mental health by definition, then you may find that they're the ones who are able to invest more time and in a good way hold your hand through the process in a way that the others, the Step Change, the Citizens Advice, National Debt Line, who do brilliant work and have brilliant, wonderful, caring counsellors, but they are more about the functional help.

8:58Martin Lewis:And if I just... You know, in 2016, I set up the Money and Mental Health Policy Institute charity, which is a charity looking at trying to break the link between financial problems and mental health problems. and I need to be straight with you and everyone else the two are so inextricably linked they are so closely tied together if you have mental health problems you're over three times more likely to be in crisis debt than everyone else and if you have money problems it it exacerbates the treatment time that you have that actually one of the things we're looking at is how do you interlink mental health counselling and debt counselling so that you're not getting them from the same people but the agencies are all put together so and I say that because I want you to understand that this isn't this is this is a real symptom of our society that you're a victim of in this and i hope i hope that we'll be able to get you through it if you want to get to citizen's advice get in touch and simon will contact you otherwise we can put you in touch with christians against poverty too and jane we'll get there you'll get that they'll help you there are there are paths that can take the pressure off there are lots of them there's breathing space there's debt management plans, there are all types of things that can take the pressure off.

10:10Martin Lewis:And the biggest thing that people say to me after they've been to one of these non-profit debt counselling agencies is, I slept last night. And if you've been affected by issues in this podcast, there are a range of organisations and websites that can offer you advice and support. You can find them listed on the BBC's Actionline website at bbc.co.uk forward slash Actionline.

10:35Martin Lewis:okay well that was quite a tricky one to start uh i presume we're going to go into a caller now simon yeah and i've very selfishly given that i'm in my mid-30s and about to move house i've found someone that can basically help me out so we've got emma from the wirral so emma is a simon proxy hello emma and hello simon hello hello what can i do for you so firstly before i ask my question i actually i just want to say thank you for everything that you do if it wasn't for for yourself martin and other financial experts i don't know where i would be today um just for context when i was 16 i i was living in a homeless shelter for two years and was a single mom a teenage mom you know and the odds were family stacked against me but when I started to focus on finance about five or six years ago during Covid you know I paid off£16 ,000 of debt and now my husband and I have bought our first house so I just wanted to say thank you for everything that you do and I'm sure there's a lot of other listeners who also feel the same way.

11:40Martin Lewis:Oh thank you so much I've not had the best week so that's very very nice to hear and I really do appreciate it from homeless to owning your own home what a wonderful story thank you wonderful so what can i do for you let's do let's let me try how positive positive um so my husband and i bought our first home in october 25 and i'm 35 and he's 42 so we're absolutely over the moon um i used my full lisa balance for the deposit and uh yeah that was quite a simple process as well actually which really surprised me and most of the remaining savings that we had went into essential work on the house that needed to be done so we only have a small amount of savings left over but our savings account is only 1.05 okay that's slap wrist time but yeah i know so now that we're effectively starting from scratch what's the best way for us to move forward what are the best accounts for us and we're looking to put away at minimum 250 pounds a month okay well that's a good amount to be saving well done you i mean look the most important start point is you build up an emergency fund of ready cash yeah and you want three to six months worth of bills that gives you that sort of financial security that financial um you know defense mechanism which is really worth doing and you can have that in any funds as long as they're easy access so the start point there would probably be putting it into a regular saver uh some of them you can take money out of now with regular savers they're not for lump sums they're only for small amounts that you're putting in each month but you're exactly in that in that bag so um a place to start you could do principality building society pays seven and a half percent interest and the reason you do these is the interest rates are much higher on 200 pounds a month saved for six months hand the economic building society 6.3 on 100 pounds a month saved for up to a year and then linked to bank accounts i mean something you could look at is first direct right now is paying switchers 175 pounds to switch to its bank account top rated for customer service and then you can save with it for a year at seven percent and you can put up to 300 pounds a month in and so so then you get 175 quid and the interest on top so all of those would be a good start point i think it's probably also worth you know that's for your emergency fund and you want to make sure you have enough you've got a house you've got bills you've got things coming in terms of building and providing for your long-term financial future I mean the two main competitors would not be saving they would be investing and reducing your mortgage yeah so I um I do have a pretty decent pension that I I have increased my contributions to and it's it's it's looking good long term and I've still got 30 years left so we'll see how it goes but but yeah for now it is about building up that emergency fund but you can Yes, but after you've done that, you can invest outside of a pension too to give you ready cash, as long as you're doing it for a longer period.

14:36Martin Lewis:And that will tend to outperform savings. But there is also the option of, I don't know what your mortgage rate is. What is it? Do you know? 4.2%. So 4.2%. Yeah, I mean, you're going to struggle over the next few years to get savings consistently outpaying 4.2%. So you might want to look at making capital overpayments to your mortgage that can get your mortgage free more quickly and investing at the same time. But let's get the emergency fund first. That gives you that financial security that you need. And those regular savers are easy. If it's not a regular saver, then there's Kahoot, which is part of Santander, will give you 5 % interest on up to£3 ,000, which is a decent lump sum account.

15:17Martin Lewis:And there's the Chase bank account at 4.5 % as well. I should note to those listening, these rates are correct at the time of recording, but rates can change every day. Oh, there's almost a bit of compliance there. Does that help? Yeah, that's brilliant. I had no idea there was accounts out there paying 7.5%. But only on, this is the key to them, you see. You can't go and say, I want to put 20 grand in. They do it. They're almost like lost leaders. You know, the principality is 7.5 % for six months, and then you have to make sure you take the money out or the rate won't be that good. And you can only put 200 quid a month in.

15:49Martin Lewis:But for your scenario, it's perfect. Simon, have you got any issues that you need to add on the top of that? I mean, the main thing I'll say, Emma, is like, congrats on buying a house, by the way. I think it's such an exciting time in your life and you're absolutely smashing it by the sounds of things. Thank you. I wasn't going to bring it up. My only apology is that you did put in your email how you'd be fangirling over Matt and Martin. And I'm sorry I'm not Matt. I was always going to say, I'm sorry you're not Matt too, but I don't mean it, it was just a nasty dig and I shouldn't do it. It's lovely to have you here for this week, Simon.

16:23Martin Lewis:And Emma, thank you so much and I'm so pleased that we've helped. What a wonderful story. Thank you. homeless to homeowner amazing yeah thank you so much guys

16:37Martin Lewis:right what have you got next for me simon yeah next up we've got dear my favorite m &m well that of course is is martin and matt but we don't have matt and we've got simon so surely this week we are s &m that's a different pod i think we should probably probably get increased the listener of figures wouldn't you let's be honest right well ag wishes to know i have planned this year to buy a new phone and a new television these will be separate purchases the phone i don't want to spend too much money on so i'm looking for a mid-range smartphone sub 400 pounds ideally and the tv i would like to splash out a little bit more on likely 1500 pounds for the specification i would like currently my plan was just to save the money and pay off from my current account however i understand that these budgeted one-off payments might look better with a buy now pay later or a zero percent spending credit card that might be a viable option for the better cash flow in case of emergencies are these the benefits of using these options worth considering i have no planned major credit application for at least 15 months and i've never used either option i do have an emergency fund but i had to repair a boiler in november at last minute so it's not as well stocked as i would prefer it to be so a very very interesting question ag thank you very much so hope I've got it right.

17:50Martin Lewis:You're looking to buy a 400 quid smartphone and a 1500 pound TV. So you've got about 1900 quid worth saving. Look, saving up in advance is always generally the best way to go with the exception of people who are trying to play the system. Right. So you always want to save in advance because it is far better to save in advance and have interest paid to you by the bank than to borrow and to have to pay back and pay the bank interest afterwards. But you're you're being savvy you're saying buy now pay later which is where you could generally can spread the cost over three months and that's at zero percent and as long as this is a planned i'm not anti buy now pay later and regulation is coming in this year my concern is people don't think of it as a debt and if you're going to do any form of debt you need to take a forensic critical decision is that right for me can i repay it you're clearly talking about you can repay it and you do it as a spreading the cost over three months in the right way.

18:45Martin Lewis:Or a 0 % spending credit card, which does exactly the same thing, but over a longer period. You've factored in one of the first things I would say, which is, let's just think about the impact on your credit score. That isn't an issue. You're not using your credit score. There's no mortgage application worth coming. So having said all that, within this, you have the money to repay. therefore is it worth playing the system in order to maximise the game for you? Yes is the answer. It is but this is only if you are very controlled with your finances and what I mean by that is we can do this as a debt form of finance but you need to make sure you've got the money put aside in savings that could pay off the debt whenever you needed to so you're only taking an arbitrary debt rather than a real debt.

19:33Martin Lewis:You're not actually going to be in debt, you're just utilising the finance. And if you were going to do that, then I would probably get myself, as long as your credit score's decent enough, a 0 % for spending credit card. I'd probably go for one like M &S Bank or Tesco Bank, because they give you rewards on spending. So if you were to use them, you would actually get some Tesco points or some M &S points on top of whatever these items cost you. And they're also 0%. Tesco, 0 % for 22 months. M &S Bank, 0 % for 25 months, go on to an eligibility calculator to find that which you would get. So why do I suggest that?

20:06Martin Lewis:Well, then you get three benefits. The first benefit I often talk about when you're making a bigger purchase, I say put some of it on a credit card because then you get section 75 protection. That means the credit card company is jointly liable with the retailer if something goes wrong. So you're getting that valuable extra consumer protection. Now you could do that and just pay the card off in full that month so you wouldn't be any interest at all. But if you're doing it this way, you still get that protection. Number two, you get the reward. so you get those points. I think Tesco's a quarter of a percent of what you spend in Tesco points comes back to you.

20:37Martin Lewis:I'd have to double check that. That's off the top of my head. And thirdly, because you owe the credit card money, make sure you make the minimum repayments each month, you can put the savings you're not using to buy these items into as higher interest savings account as possible, currently earning 4.5 % on it. Now, this technique is technically called stoozing. That's where you deliberately create a 0 % debt and save the money at high interest. So effectively, the credit card money is lending you the money for the purchase at 0%. You've got the money and you're using the money they've lent you to earn at 4%, 4.5 % interest on top of.

21:13I mean, that is the perfect technique, but I hope everybody listening can understand the risks in

21:18Martin Lewis:it. The risks, if you don't do it right, you don't follow the recipe, something happens, you have an emergency, it can go wrong. So the safest option is save up and buy it. And that's right for the vast majority of people but the system playing option would probably be to put it on a zero percent rewards credit card making sure you're making the minimum repayments and make sure you pay it off before the zero percent ends and that way you can maximize the benefits the only other bit of advice you've got to throw in as soon as you get the new phone download bbc sounds app start listening to the martin lewis podcast yeah i mean and you're right quite right i totally missed the fact that you should do that too and there's a program you could watch on your television while we're at it isn't there but i can't say that because it's it's from a different channel

22:02where are we going to next simon you are the questions dude obviously at this point matt would normally stick in a funny question but i'm just going to elbow in as this my one chance to be here and say what is the totally normal thing that you've never done what is the most totally normal thing that i have never done wow i'm going to have to do the first thing that comes to mind

22:22Martin Lewis:and I think this is probably more totally normal for people of my generation because I sadly have to admit I'm a different generation to you than people of your generation. I have never had a drag or smoked a cigarette in my life. I've never had a cigarette in my mouth and smoked it. And certainly my age growing up that was quite rare and the reason for this is quite simple. My dad smoked a pipe when I was young and when I was about seven I put his pipe in my mouth because that's what you do when you're seven. And I had a big suck on the pipe and then I threw up. That was awful. Absolutely threw up.

22:58Martin Lewis:And in a good way, it scarred me for life from ever wanting to smoke in any way, shape, size or form. Does not having a drug and a cigarette, does that qualify in your totally normal thing you've never done? Yeah, I think most people probably have tried it once. Yeah, some people a lot more. Yeah, and some people a lot more. Actually, the reason I asked it was because I had one recently that I thought of you about. because I'm going to stag do in a few weeks' time and the lad who's getting married is, like, big into his golf. Okay. And I know you're big into your golf. So I did have this... I've never played a round of golf.

23:33Okay. And I had this sort of moment of fear that the lads that were organising the stag do would organise a round of golf because they'd think that's the sort of thing he'd like to do.

23:41Martin Lewis:Yeah, and you could not... If you've never played golf, you cannot go on to a proper course if you've never picked up a club. I mean, that is just not how it works. Well, that's the thing. I didn't know whether I would need to just... Or can you just stumble your way through? You could drive the buggy. Yeah. My experience. If there isn't a kind of windmill involved, I've never played golf. I thought you were going to say something like you've never had a hole in one, whereas I was going to go, of course I have. Have you? Not only have I had a hole in one, but I have had two holes in one in consecutive rounds.

24:09Martin Lewis:I've never had one before. I've never had one since. But in one week, I had a hole in one, and then I played two days later, and I got another hole in one. and the first hole in one was the worst because I'd been having a lesson and my lesson had finished and I was on the tee by myself and I hit the ball and I was like, I think that's just gone in. And you're about 150 yards of it, I think that's just gone in. And I'm looking around going, there is no one here and I've just got that in. And so I called ahead, right, to the next tee because there were some blokes on the next tee and I called ahead and said, excuse me, excuse me.

24:43Martin Lewis:And they looked back because you don't do that, it's bad etiquette. I said, I'm so sorry, I think I've got a hole in one and I'd really like you to check so that I'm not there. And this gentleman walked back, and it was golf, so you'll work out where it's going. And he walked back and he looked in there and he looked up and he recognised me and he picked the ball out. He said, you have got a hole in one, Martin, and I'm a high court judge and I'll sign that you've done it. So I had back the best witness in the world and the next time I got one I was playing with a friend so I had a proper witness there and then at the time.