Here in the uk its reckoned more than 8 million of us are struggling to cope with the money we owe. How do we free ourselves from the debt spiral and get savvier about the money we spend and save . We sent finance expert Jasmine Birtles to find out how to get back into the black. Im in birmingham today with £500 to see if people are spenders or savers. If i give you a pound, would you spend it or save it . Im a spender. Ill spend it because i am thirsty. I need a drink. I havent got enough money to save. While the team continue with our experiment, i am catching up with debt Charity Community money advice. We are volunteers from Community Money advice. They are hosting a road show here in one of birminghams largest shopping centres. January is when we get a lot of calls across the whole cma network because people have spent at christmas and enjoyed themselves and really not connected that with the consequences of what happens in the weeks afterwards when all those bills start coming in. I was passing by and ijust asked some advice because christmas has been a little bit difficult because i have got myself into a little bit of debt. Our aim today is to try and break the taboo that people have about spending money. We find in all the advice we give face to face with people that once you get it out in the open and start opening the post, that wall just evaporates. Out of the 500 £1 coins weve been giving out just how people decided to save and how many chose to spend . 148 would save them but 352 would spend them. It looks like birmingham people like to spend. Our experiment today was just a bit of fun but statistics show that we are a nation of spenders. The average household has £14,000 worth of non mortgage debt. And one in three households in the uk has no savings whatsoever. Getting out of debt isnt easy. I should know, ive been there. But a unique project in london could have a solution. Im in the london borough of newham which has the highest level of problem debt in the country. One in four people here is behind on a bill or a credit commitment. Morning, welcome to money works. Since money works opened two years ago, theyve seen over 3,500 newham residents use the service. Money works was set up by the mayor of newham. A client had gone into his surgery and had a financial crisis and had ended up going to loan sharks. It was then that sir robin thought, what can i do for the residents of newham to offer more Affordable Credit . Ive just put in for an £800 loan so lets see what happens. Just at least get a good sum, about 200. Whats special about money works is that it offers loans in partnership with a credit union alongside debt advice. Its not about giving a lone and putting a plaster on it and it is forgotten about, it is about working with the customer are looking at where they are and how we can move them forward. How are you, michael . Nice to see you. Michael first came to money works 18 months ago, desperately struggling with £5,000 worth of debt. I got very, very depressed and i tried to take my own life on several occasions because of the pressure of debt. Ill health forced michael to retire. This, together with the drop in benefits, meant he was struggling to afford basic living costs. It was our washing machine that broke down. It always seems to happen roundabout christmas time, i dont know why. Michael couldnt afford to buy a washing machine out right so he got one from rent to own company brighthouse. At £9. 50 a week, it seemed like a good deal but the total cost amounted to over £1600. You end up paying astronomical amounts for small items. Brighthouse told us they give people on lower incomes and affordable way to get everyday goods. A lot of customers who come to us arent even aware of some of the Interest Rates that theyre paying and its an eye opener to them. I thought, my word, all that money. Its just ridiculous, all that money. I can dojust a quick calculation to see other gas and electric supplies. Michael was given practical advice alongside a loan to pay off his debts. We decided to offer him a money works loan to pay off the brighthouse loan and michael was was £1213 better off. Michael is now debt free. Companies like money works, its a pity they havent got it nationwide. It worked wonderful. Money works is proving so successful, other councils are now looking at doing the same. Back in birmingham and the road show is in full swing. For people who have got credit cards and have got debts that are building up, the answer to solving the runaway credit is not more credit. Now is the time to actually cut up that credit card. 0k. Fantastic. Weve had people burst into tears at the moment that the scissors cut through because of the emotional tag and hold that the idea of credit has got with someone. It might come as a shock to most of us, but by seven years old children have already formed their financial habits. Ive come to kirton school in boston in lincolnshire to meet an expert team of super savers. Hello. Hello, please may i have the kirts to go deliver . You can, yes. Lam lily, and i am the bank manager. I need to look after everyones money and make sure that nothing goes wrong with it. My names taylor and im the assistant bank manager. I have to supervise all the cashiers and make sure no one is misbehaving. When we first started the project, we were asking children where they think money comes from. They think itjust comes from a cashpoint or it comes out of a till. They didnt really understand, which is why we introduced the idea of you need to work for your money and then youre rewarded. Children can earn their kirts by doing well in spelling and times tables, working in the bank or shop and for special achievements. You have 14 kirts, what would you like to do . Can i deposit them, please . So this is an actual kirt, theres the back of it. Its worth about 3p but it is worth more to these children. They can either deposit it in the bank here or once theyve earned enough, they can take some out and spend it in the kirton store next door. Im going to go in and have a look and see what i can get. The children are often saving for over a year before they will buy anything at all. The interest has made a difference as well. They see it as, actually, if ijust keep my 50 kirts in the bank, over a year im going to get an extra 30 kirts. It is clear to these children that saving reaps rewards. So, what are you going to buy . Teddy show me where the teddy is. Is it that one . 0h, lovely. Shall we go in and buy it . Yes. Come on, then. What we are hoping is that children are actually understanding and experiencing we process of saving and learning to wait for things. I am going to call him tom. Back at the road show and the day is coming to a close. So, julian, how has it been today . We are seeing lots of debts but the most Important Message is, dont sit on it, get help, there is no doubt that we have yet seen that cant be sorted and get you the freedom. No debt that we have seen yet. Now then, still to come on tonights show. If you look at the impact of all of those people starting their own businesses who are aged 55 or over, that is worth over £7 billion to the uk economy in any given year, so that is really good news for our economic prosperity. 0verspending on credit cards can be a huge problems for people but an even bigger problem nowadays is Council Tax Debt. Local authorities are often resulting the bailiffs to recover what they are owed. But is this approach too heavy handed, especially when some people simply find themselves unable to pay . We sent markjordan to investigate. The clink prison museum. For centuries its bars held traitors, thieves and debtors. The traitors were executed. But for debtors the only way they would walk free was to pay up in full. But how to do that behind bars with mounting weekly jail charges . The rat man, unable to pay, ate rats until he died. This is a grim place, so why is it that a leading london barrister thinks Many Councils are using similar tactics to bring in their Council Tax Debt . Council tax is britains biggest personal debt problem and it is growing. Some local authorities are going down the road of bankruptcy, making people insolvent, which hugely multiplies their debt with the consequences that they lose their homes, their businesses. It is utterly devastating. Its probably, in some ways, it is actually worse now than being jailed for council tax default. To be honest, i lose sleep, i am anxious, i have a lot of anxiety. The worst cases ive been involved with myself, people have actually committed suicide. Four years ago, Peter Williams brought trains to a halt after killing himself on the railway. His home had been taken away for failing to pay £1350 over Council Tax Debt. The problem was, peter was mentally ill and nobody realised this at the time and, as a result, he was literally hounded to death over what was a relatively small amount of money, £1350, which was inflated to over £70,000 by the time of his death. It was all costs, he had paid his council tax, this was all costs. Im seeing this kind of stress repeated every week now around england and wales. My court case. Contact us now to avoid further action and costs. In the past two years, court action for Council Tax Debt has risen a0 . Use of bailiffs is also up. Notice of removal action, that means we are coming to get you. That is your copy there. It is, we have not received any pavements whatsoever. I am struggling at the same time and i just want to feed my child, ijust want to eat, that is all. I require a payment today. You have gotjust over £1000 to pay. So, what are you offering now . 97 of us pay our Council Tax Bill but debt campaigners claim over 200,000 bailiffs visits were made in london to those who dont. The figures show, if you look at boroughs across london and, in fact, across england and wales, theres very different practice in different boroughs, its a postcode lottery. Westminster council send bailiffs out over 18,000 times, while havering was a tenth of that. In less than a decade, government grants to councils have been cut by a third. Whoever youre looking for its not me. Westminster and several other councils declined to be interviewed. But all insist they avoid targeting the vulnerable, only using bailiffs when sustainable repayment plans have failed. Im asking a simple question. But single, unemployed mum michelle is watching her £86 Council Tax Debt spiral. It escalated to £608. 75 from £86. 75. Yeah, i dont know how that happened. Its bad enough to pay that debt and then theyve chucked that on. Im thinking if i cant pay that, how am i supposed to pay that on top . What is it you want from me . Its the councils who decide if dave the bailiff comes knocking. Is there any difference in the way you work between cant pay or wont pay . Thats not my business. The system does not distinguish at all now between the cant payers and wont payers. The council tax has become a kind of frankensteins monster. For all intents and purposes, the local authority is now taking over in terms of council tax by its computers. Its the computer which calculates your bill and is in charge of every step of the way. 0ne exceptional week, franklin earned £170 on his zero hour contractjob. So the council computer cancelled his council tax benefit. They sent me an assessment saying i earned £170 a week so i can afford to pay it. Isaid, no, im not. Some weeks i was earning £20 a week. Franklin says he couldnt afford the full council tax now being charged. And the bailiffs are knocking. Im trying to better myself. Im diagnosed with Heart Failure and kidney failure. I have multiple organ failure. I thought, let me go out and get a job for the last years and try to better myself, you know. This is the obstacle why people dont want to work because of the hassle. Not because theyre lazy, but because of the hassle that they get from the government. The letter box isjammed up. In some cases where its impossible to get the money back, then theres nothing else we can do. Are you finding that more and more . Yes. People havent got the means to pay. Mike thompson was a book seller until a devastating illness meant he could barely work. His Council Tax Debt would take his home and lead to recovery costs 30 times the original arrears of 2,900. The council forced the sale of the house, i got just over £6,000 as my share of the proceeds. The other 85, £86,000 was swallowed up in the debt itself, plus all the costs that had accumulated along the way. Now mike lives in sheltered social housing and guess whos paying . Now the government foots full housing benefit for me which is currently about £8,500 a year. The lawyers who do this business for local authorities prosper mightily, but the local authorities themselves actually in the great scheme of things actually lose out big time. Wonder if bankrupting, seizure of homes and use of bailiffs is working. They claim bailiffs only recover 30 of Council Tax Debt and are getting rid of them from april. If a family is trying to keep the bailiffs away and prioritises the bill for council tax, they then might miss their rental payment and then youre left with a homeless family being traumatised. But then presenting the Public Sector with a huge bill in terms of rehousing and the problems with homelessness. Good morning, first credit, how can i help . First credit are in charge of hammersmiths ethical new Debt Collection. We dont add any interest or charges. Like tv money advisors, they set up a payment plan. We would never look to pursue any bailiffs. Im hoping for hammersmith they will end up with the same amount of money collected or more, which they can get back to the residents. Im already seeing on cases theyve given up on, im already collecting money on the cases theyd given up on. I know that will give them more money back for their residents, which is a win win. Are you worried some people might go out and buy a telly rather than pay the council tax if youre ethical . Im optimistic this will work. We are not stopping Debt Collection. Werejust doing Debt Collection in an ethical way. But the bailiff industry warn hammersmiths experiment will backfire. The Civil Enforcement industry has collected around £650 million worth of local authority debt. To dispense with the Enforcement Service will come at a price. I think that in two or three years time, the coffers will be looked at and the question will be asked, wheres the money . They come up with all sorts of excuses. You can normally read them, whether or not theyre lying or not. Well, i can any way. Now ethical Debt Collection in hammersmith is about to show whether or not the bailiffs knock might, like the clink, become part of debt collecting history. We hear a lot about baby boomers and how lucky they are compared to younger, less well off generations. But not all boomers are secure enough to put their feet up and let their pensions take care of everything. In fact, a Record Number are funding their retirements by setting up first time business ventures. We sent our resident boomerjo good to meet some of them. Im 62 and im still working, whether its hosting my daily show on bbc radio london or presenting films like this. I started work at 16. Im freelance, so i dont have a pension. But i often wake up at night with a fear of whats going to happen when im no longer flavour of the month . Living off a state pension hardly fills me with glee. I realise at some point im going to have to change my life. Im not the only one. Theres a lot more like me. Im 61 now. Youre getting older and youre getting less employable. I would like to work for quite a few more years. I was unemployable i think because of my age. Everyjob i went for, i was turned down flat. Like many others in our age group, linda and louise need the money to keep coming in. They know they still have loads to offer. They decided to take matters into their own hands and started up their Small Businesses, for the first time in their lives. The best things in life are free but you can give them to the birds and bees i need money. Down on canvey island, linda is running a Small Business making designer wearfor dogs. I do collars, leads, coats, harnesses, carrier bags, carseats. Sometimes i get up at four, five. 4am or5am . Yeah, crazy. Because theres a lot to do for one person. But its not financially secure at the moment to employ people or to go the next steps. It will do. Basically, if ive got work to do, ive got to get up and do it. Most of it is online selling. Which to a dinosaur like me, ive had to learn a lot. How about this, look, its lined. Oh, my goodness. Its so snug. Now im shipping them out everywhere. Ive sent off to las vegas, valencia in spain. So i wasnt only going england, scotland, ireland, wales. Its going. When i started with this, i started with 79p and a sewing machine. That was it. And im thinking theres no food on the table. Yes, i can go to family. Yes, i can go to friends. It wasnt in my nature. They say, oh, what are you eating tonight, mum . Oh, yes, im having this and that. And literally living on toast and getting up the next day and making something to sell it. At the end of the day, youve got to rely on yourself. You know, thats the way i am. Im very, very proud and i was like, i can do this. Ive been laid off for work, my rent is due my kids all need brand new shoes so i went to the bank to see what they could do they said, sorry, looks like bad luck got a hold on you moneys too tight to mention. There are many like linda starting up Small Businesses later in life than would be expected. Barclays bank have done a lot of research into this growing trend over the last ten years. Its actually really surprising what we found. Theres been a huge growth in the number of people in their late 50s, even late 60s who are starting their own business. If you think of people in their mid 20s, early 30s, weve seen about 23 . But actually for older people, in their late 50s and 60s its much higher, a 63 growth. Weve seen this new trend most prevalent in london and the south east compared to the rest of the country. Actually in london its up 89 , higher than anywhere els