Credit can be very seductive. Advertisers have made a fortune on the back of the buy now, pay later rhetoric. Interest free credit, 0% balance transfers, cars we could never afford now tantalisingly close through finance deals – everyone vying for your hard-earned income. And the beauty of it is it doesn’t necessarily feel like its real money. Plastic rules – and now we don’t even need a pin number – just the wave of a card. Soon we won’t even need that. Our thumbprint or the blink of an eyeball or anything that makes it easier to spend and gives us less time to think.

Some people rarely see cash anymore. Their card details are stored by a dozen different online companies and everyone from the garage forecourt to the fast food outlet are only too happy to take our cards. No more is the minimum payment level to use our card, we can now buy a bag of chips on a buy now pay later basis. And when we do want cash, the next hole in the wall is just in front of us withdrawing money has never been easier – most of them flagging up the key word “free” cash. It all feels very painless and in moments of need, want or just temptation – credit and “free” money snares us and entraps us.  

In an IVA it’s somewhere between difficult and impossible to get credit. Some lament that fact and regard it as a major intrusion on their personal freedom to be denied such access. But for many it’s actually quite liberating. The trap has been sprung and though the mind-shift may have been painful, there’s an odd kind of relief in not falling down the credit trap anymore.  If there’s no money in my account I can’t use my card. My credit and store cards were destroyed and the accounts frozen at the outset in my IVA. I can no longer borrow other people’s money through credit transactions – it really is a case of spending only what I have.

Of course credit has its uses – what else can we do when the car blows up, or the benefit cheque is delayed or redundancy, sickness or relationship breakdown occurs. The offer of a new job is conditional on me having a reliable car to get there in the first place. The car on finance becomes the only way. But at the risk of preaching to the converted – the problem is that it does need to be paid back. Well – usually anyway.

And so yes – cash is king. We may tire of hearing grandparents offering their generation’s mantra “if you can’t afford it, you can’t have it), but grudgingly we have to admit, they have a point.

And a cash only lifestyle makes it much easier to budget effectively. If we’re living in an overdraft anyway, a little extra doesn’t feel like it makes much difference – though of course it does. When we’re down to our last £100 in our basic account – suddenly we know exactly where we stand and tough decisions need to take place to ascertain its proper use. In an IVA we’re allowed, even encouraged, to save a little. The rainy day can no longer be put on the credit card. So – some provision for the irregular or unexpected bills makes good sense. If on the annual review it becomes apparent that thousands of pounds have been saved, some eyebrows may be raised and uncomfortable questions asked. But a few hundred for the next service or appliance breakdown is just sensible planning. Usually in an IVA budget there is some provision for repairs or emergencies and the like – and this needs to be tucked away for such purposes.

Well its true no-one knows what 5 years in an IVA will bring and sometimes with the best planning in the world, things do go wrong and an unaffordable expense happens. There are no easy answers when there is no credit available – at such times, the first course of action is to speak with our IVA supervisor. They may well be more understanding and helpful than we fear.