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Credit Union Helps Mum Pay Off Huge £12,000 Debt and Develop A Savings Habit

How A Credit Union Saver Loan was instrumental in helping a mum of 2, drowning under a debt of £12,000, to achieve financial independence.

Mum-of-two Alicia Felix, 49, fell into debt after making a credit card mistake in her younger years. She has since turned her life and finances around and is keen to make sure her daughters don’t make the same mistakes.

One of the big issues that Alicia faced at the time was the fact that credit was so readily available. She said: “Back in 2003, when I was in my late 20s, I applied for one credit card and got approved. I then applied for another and got approved again. At the time, my credit rating was so good, I was able to take out four separate cards.” In addition to this, she was able to open store accounts with three catalogue firms: Very, Argos and Littlewoods. “In retrospect, I was very naïve,” said Alicia. “But at the time, taking out credit was almost too easy. I had funds at my disposal and felt that this was money I was allowed to spend.”

Before long, Alicia found herself drowning in debt…

After contacting the Citizens Advice Bureau, they put her in touch with stepchange who organised a repayment plan with her creditors, and from there opened an account with London Capital Credit Union where she found they could offer low-cost saver loans and also provide financial education to help people build better habits.

Under guidance from the credit union, Alicia started saving. While starting to save when you have debts to clear isn’t always recommended, credit unions take a different stance on this. They often encourage members to save while paying off debts in the view this teaches good financial habits – helping people build long-term savings beyond the life of the loan.

“In the beginning, I was putting away just £7 a month,” said Alicia. “For me, this was about developing a discipline. I felt the benefit of starting to save, and this gave me something to build on.”

After a lot of hard work and patience, Alicia became totally debt-free in 2018. She still saves with the credit union today, and now has a direct debit which channels money into her savings every month. “This means I don’t have to think about it, and barely notice the cash leaving my account,” she said. Over the years, Alicia has built a healthy pot of savings.

Alicia’s tips to those in debt

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Don’t stay quiet. You need to seek help

Alicia said: “I know there are so many people out there with a lot of debt. You can’t tell when people are struggling. I remember what it felt like having £12,000 of debt, and how embarrassed I felt. But you must not stay silent. It’s important to get advice.”

Reach out to a free debt organisation such as Citizens Advice, Stepchange or National Debtline

Alicia said: “There are groups that can help you consolidate your debts into one manageable monthly repayment. You need to turn to people who can guide you in making a plan.”

Be patient

Alicia said: “It can seem as though it will take forever to clear your debts, but with a plan in place, you will get there.”

Build good habits

Alicia said: “I’m keen to promote the importance of dealing with debt and building good savings habits. For me, joining a credit union has made a huge difference to my life.”

To find your nearest credit union, head to ABCUL.

Remember to ask for help

Her story comes as new research from Fair4All Finance reveals that nearly two in three people feel they are struggling with debt, yet 82% of the population keep their money worries to themselves.

Lauren Peel, director of consumer insights at Fair4All Finance. said: “It’s crucial that anyone struggling seeks support from credit unions and community finance providers – or from free debt advisers – rather than turning to loan sharks, illegal money lenders, or spiralling into problem debt.”

Elsewhere, new research from the Financial Conduct Authority (FCA) shows 7.4million people are struggling to pay bills and credit payments.

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