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Low paid and penniless

Low paid and penniless

Published at 3:46pm 22nd January 2014. (Updated at 9:24am 23rd January 2014)

The latest unemployment figures show that fewer people are out of work.

However, there is growing evidence that having a job doesn't always pay the bills.

According to a recent report, more than half of people living in poverty are in working families.

When the situation becomes more desperate, some resort to payday loans which have very high interest rates.

The Citizens Advice Bureau has seen an increasing number of people coming forward with money problems.

Stray FM's James Stanley took out a loan several years ago and struggled to keep up with repayments:

  Harrogate debt specialist Heather Brock explains what help is available:

  Other charities are bracing themselves for more enquiries as millions of families receive their post-Christmas credit card bills.

The Debt Advice Foundation is keen to dispel what it calls "money management myths":

1) It's not that hard to keep the money straight. Yes it is. Running a family budget is like running a small business. So give yourself a couple of hours, sit down with a pad or a spreadsheet and list all the bills you have to pay every month to keep the family household going. Those are the first priorities. Then list hire purchase payments (which are secured against the purchases, such as your car), then the unsecured debts (credit cards and personal loans), then all the rest - paid-for TV services, club memberships and online subscriptions. Now add up your income and that's what a budget looks like.

2) It's more important to pay credit card and loan debts than the bills. Wrong. Paying the bills is what keeps a roof over your head, the house warm and food on the table. You should make these payments before anything else.

3) Online and mobile direct payments are very convenient. Convenient for the seller, not always for you. Mobile shopping is the fast-growing area of retail. Do you make your best money decisions sitting on the bus looking at your phone? Probably not.

4) Banks are there to help you. No, they are there to make money, to sell you things and to persuade you to buy things, just like any other shop.

5) Banks and credit card companies are more or less the same. No they're not. The money in your current account is yours and you may get interest or cashback deals. A credit card is always a debt. If you're not careful it can be forever, not just for Christmas.

6) Credit is a service. No, credit is a product that you pay for, which may be useful or may be a dreadful waste of money.

More information from the Debt Advice Foundation here.