There are a range of debt solutions available to you but the first step is to try budgeting to reduce your debts and sort out your finances. There are simple tricks you can try to get the most from your income and minimise your monthly expenditure. It’s time to start 2016 and wipe the slate clean.
Work out a budget
Everyone has to work on a budget, no matter how high their income or they’ll find they are living outside their means before too long. Write down a list of your monthly income after tax and anything else you receive such as working tax credits or private pension etc. Add up your total monthly income.
Next, write down all your outgoings. Start with the priority bills: mortgage or rent and council tax. Then, write down all of your monthly direct debits. Finally, write down the amount you spend monthly on all other monthly expenses that aren’t included within your direct debits e.g. gas and electricity, food and housekeeping, fuel/public transport, parking costs, dentist/optician costs, house maintenance, pocket money and school trips etc. Add the totals up so you now have a final amount for your incomings and outgoings.
Your income minus your outgoings is your expendable income. If you find you are spending more than you are earning and relying on overdrafts, credit cards or precious savings, you know you need to act immediately!
Cancel any unused memberships
When you went through your direct debits you may have come across something you had forgotten about and don’t use regularly. Did you have a gym membership that you forgot to cancel or are you paying for an online movie and TV watching account even though your partner has one and you can access it on multiple devices? Cancel anything you don’t want and don’t keep too many that you don’t need – it’s okay to have a hobby – you don’t have to limit your life too much.
You could save money by switching your bank, energy, mortgage, credit card, internet, TV package, mobile phone contract etc. to another tariff or company. Shop around to see what’s on offer, then call your current company and see if they can offer you the same. You’ve nothing to lose and it could save you in the long run.
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Set up direct debits for recurring payments
Most companies have cheaper tariffs for customers who pay using direct debits, (this is particularly common with energy providers). Why pay more if you don’t have to? This way you also won’t run the risk of missing a payment and being charged a late fee.
This sounds obvious but it takes some forward planning not to grab a quick coffee on the way to work or splash out in a sale on your lunch break. Take your own coffee and lunch with you. This simple change could be all the difference you need to see a change in your spending and the chances are it will be better for your health too!
See our blog for 10 reasons people enter into a Trust Deed.
Use a shopping list
Before going shopping for groceries, clothes or anything else, look at what you already have and then write a list of what you need to buy. This will prevent impulse shopping that will drain your wallet and leave you short for the month.
Only buy what you can afford
This may sound like an obvious move too but a lot of people find themselves tempted by a sale in their favourite shop and put the balance on credit because they’ve found a ‘good deal’. Remember, if you end up paying more in the long run on interest, it was not a bargain. Use your expendable income on shopping and you’ll be less likely to build up debts and find yourself struggling with repayments.
See our blog for 10 frequently asked questions about Trust Deeds.
Sell Unwanted Items
You may be able to sell items you don’t want, need or use very often online or at a car boot sale. You might not get back what you paid for but something is more than the nothing you got from having it sitting in your house gathering dust!
Downsizing means selling or moving into a smaller, and typically cheaper, property. This could be a temporary measure and you could consider putting your goods into short-term storage.