Taking back control of your finances
Unforeseen circumstances such as being off sick from work, looking after a relative, unemployment, or over-extending yourself financially can understandably cause a shock and loss of control to your budget and household finances. The good news is that taking back control of your budget is easier than you might think. Not all your expenses have the same level of importance, and the order of importance could surprise you. Don’t Fret About Debt’s expert advisor, Alan McMillan, discusses how and where to focus your budget to give you back control.
1. Rent or Mortgage; Council Tax; Gas & Electricity; Food; Home Insurance
The consequences of not paying these costs are usually the most severe – if you haven’t paid your credit card then interest and charges may be added, but if you haven’t paid your rent or mortgage then your home is at risk. Councils have unique legal rights to arrest money from your wages or bank account without taking you to court, they can automatically get a summary warrant if you haven’t paid your Council Tax, and you don’t get a say how much is taken, as this is decided by law. Falling behind on your gas & electricity can eventually lead to the supply being cut-off or prepayment meters installed.
While food may seem an obvious priority, many people prioritise paying back credit cards or loans over a realistic food budget. If you are in arrears on your rent, mortgage, Council Tax, gas or electricity, our team could help you put the arrears into a debt solution, help to prevent further action, speak to your creditors on your behalf so you don’t have to, put realistic repayments in place, and allow you to focus on your current day to day budget.
2. Travel; Telephone; Life Insurance; Factoring Fees; Clothing
If you are unable to get to work, you’re unlikely to be earning money. While working from home may have helped those who could with travel costs, the costs for gas & electricity will likely have increased due to more time at home. Life Insurance is particularly important for anyone with children, or with a partner who would be left to pay the mortgage should the worst happen. Property factors won’t be slow to pursue any outstanding bills and legal action from your factor could result in much larger debt.
Clothing, particularly when you have growing children, is an unavoidable cost. Having a sensible budget for clothing is key, so think about how much you might spend over a year and divide this by twelve months, or 52 weeks if you get paid weekly. Setting this aside in a separate bank account from your bills means the money will be there when required.
3. Internet; Hairdressing; Hobbies & everything else
These are the things that you would like to do but aren’t essential. If you are struggling with the expenses in sections 1 & 2 then you should be looking to make savings here.
4. Consumer Debts – Buy Now Pay Later, Credit Cards, Loans, Overdrafts, Catalogues etc.
Consumer debts should be one of your lowest priorities when you are struggling financially and where you should seek expert debt advice. Our team of experts can help to reduce your monthly payments to a realistic amount that will still allow you to budget for the costs we have already discussed. When taking control of your budget, paying your creditors what you can afford, after seeking professional advice, is a key recommendation.
If you would like to discuss taking back control of your finances and deal with your debt, contact our expert team at Don’t Fret About Debt who can talk you through a budget plan based on you and your circumstances. Part of the budget planning that our team run through with you includes being able to celebrate special occasions such as birthdays and holidays. Budgeting is necessary to control your finances, however it does not need to exclude opportunities for you to celebrate special occasions and still deal with your debt.