Leading Debt Management provider offers advice on how to manage finances when facing long term work absence

Recent statistics¹ have revealed that absences of four weeks or more account for about one fifth of the total sickness absence in the UK. Stress remains the number one ranked reason for long-term absence for non-manual employees, workload being the number one cause of stress at work. The consequences of long-term absence can be far reaching, but especially so on personal finances, as leading debt management company, EuroDebt is warning.

Whilst many workers are partially protected by employment law, lengthy sick leave can still have a rapid and long-term impact on an individual or household's finances. The opportunity to earn overtime disappears and other non-standard payments are no longer received. For freelance and self-employed workers the situation can be worse, where sick pay is rarely part of the package and may jeopardise future contracts where rights of substitution may apply. And the problems can be compounded if people try to return to work too quickly.

EuroDebt, is therefore offering some useful advice to those who find themselves facing long-term sick leave.

"Recent statistics show that personal debt now exceeds £1.4 trillion and a quarter of the UK population (25%) have little or no awareness of how much they spend a week, with a similar number (26%) having little awareness of their monthly cash flow². " confirmed Kevin Still, Director, EuroDebt. "The impact on those who may have to take unexpected leave due to ill health can be very significant. Monthly bills and financial commitments still need to be paid. This may be particularly acute if the household counts on extra income from the partner working part-time where one family member's illness could have a serious effect on the normal status quo."

The average household debt in the UK is quoted to be nearly £9,000 (excluding mortgages and secured finance). However, EuroDebt's experience with households in an unmanageable debt situation is that the level of unsecured debt is just below the average gross annual income of around £23,000. Many EuroDebt clients have well in excess of 8 creditors.

According to EuroDebt there are some basic, but essential, actions consumers should take to try manage their spending which will help them understand the scope of their financial commitments and enable them to make more informed decisions about the next course of action required. In many situations where one of the bread winners is unwell it is essential to take prompt action.

EuroDebt Top Tips to Help Manage Your Debts

Taking Stock

• Putting income and spending into writing, will help put financial affairs in perspective.
• Try to set down your figures so that they reflect your cashflow. Some weeks of the month are likely to have more going out than coming in. This will help you establish what needs to be set aside each week or month.
• Be realistic about your expenditure and if this can be cut down in some areas. It is really important that you don't put in unrealistically low figures because this will make it difficult to stick to the plan.

Some rules of thumb to take into account when setting a monthly budget:

• Don't forget to keep an allowance for housekeeping, especially where you have dependents. It is important to have a realistic budget for housekeeping as well as clothing and shoes even if realistically nothing much is spent on these items on a weekly basis. Eventually these items will need replacing and the money should be budgeted for.
• It is impossible to budget accurately for costs that you may or may not have in the future, but if possible try to set something aside for repairs to your home and for emergency costs.
• Think about the cost of entertainment, tobacco, children's out of pocket costs, etc. Any provision should be sensible and reasonable.

The Road to Recovery

• Once you have a clear understanding of what your commitments are you can then seek advice as to your best course of action or contact your creditors or their debt collection agencies yourself if you think you will struggle to keep up with any payments.
• Keeping creditors informed of your financial status will work in your favour as it demonstrates to them a degree of commitment and willingness to solve the problem.

"We want to help people make informed decisions about their financial affairs, by prompting them to think about their future plans and what impact unforeseen events may have on them", confirmed Kevin Still. "Our experience has shown that illness and the subsequent after-effects are major causes of unmanageable debt problems. These require very careful attention and professional support to deal with the pressures that are likely to arise from creditors of all types trying to recover their money."

1 - CIPD Survey – July 2006
2 - Credit Action Statistics – February 2007

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