The majority of people slide into debt through circumstances beyond their control, they really want to repay their debts but often lack the professional guidance they need to get back to a life free from debt. Without help, debt consumes their whole lives, allowing the onset of the wider effects; including depression, relationship breakdown, poor work performance and associated psychological and physical problems.
Recent figures show that UK households have run up a debt mountain to the tune of £1.4 trillion with the average UK household owing over £9,000 in unsecured debt with nearly 300 people a day being declared bankrupt or insolvent. Staying out of debt just isn’t easy!
Nearly five million of us regularly spend more than we earn each month which has prompted insolvency practitioner and managing director of The Debt Advisor, Bev Budsworth to offer her advice to make sure your finances add up this year.
If you do find yourself with unmanageable debt, you need to take responsibility and, above all, don’t panic; there is lots of help and guidance available. I have outlined my top tips to control your spending and effectively manage your finances:
Prioritise
Make sure you pay your mortgage and / or secured loans first. If you don’t pay these, then your house may be at risk of repossession – mortgage, rent, council tax and utility payments have got to be the priority. However, don’t get yourself into trouble with creditors, or the law, and only treat paying off the minimum balance as a short-term measure. If you are having difficulties paying the bills, pick up the phone to your creditors and explain the situation, they may be able to reduce your payments or give you a short payment break.
Keep a tight budget
This will allow you to keep an accurate picture of your financial position. It will show you how your money is being spent, allowing you to set spending priorities and highlight where savings can be made. An effective budget will also show you how much spare cash, ‘spends’, you have each week, after paying your bills. Make sure you don’t draw out more than your weekly ‘spend’ amount and, if tempted, leave your credit / debit card at home.
Work out your spending
If you are spending too much on clothes, holidays, household goods or entertainment you need to cut back and get rid of unnecessary expenses. Look at expensive gym memberships and regularly check your bank statements to identify any standing orders or direct debits for services you no longer use. Work out a realistic budget for yourself and think ahead to anticipate spending peaks.
Save, save, save
Look at ways you can save in everyday life. For example: when out shopping, make a list and stick to it, use money off coupons and take advantage of multi-buy offers. Other ideas include taking a packed lunch to work. Quitting smoking - this isn’t just bad for you health, it is very bad for your pocket too! Remember, the more you can save on your daily living costs, the more you will have to treat yourself every now and then.
Get moneywise!
OK, it’s not the most riveting subject in the world, but having a greater understanding of how money works and what you are signing can pay real dividends. All finance agreements are now regulated which means you must be treated fairly. By understanding how you are being charged, you can make real savings. For example, by transferring your credit card balance to an interest-free card and cutting up your old one and looking at your current utility providers, looking to reduce the amount you have and switching to cheaper ones.
Debt and chronic stress are linked, studies have proved this. That’s why The Debt Advisor not only sorts out the practical issues of repaying the debt, but also addresses the wider aspects. We work with a resident psychologist to offer trained help and counselling to tackle the associated physical and psychological problems.
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