Managing Debt

The big problem with money is there is never enough, is there!
I expect if you are reading this you are on a limited income, maybe benefits, so you really need to duck and dive to make each pound go further, so hopefully, this will be helpful.

Firstly work out your budget.
You should know, and if you don’t, find out what you are getting in every week, or month (and do check you are receiving all you are entitled to). OK this is what you have to work with. Now work out what periods you are going to budget to- I’d recommend weekly, particularly if your benefits are paid weekly or fortnightly, and/or finances are tight, so you are quickly aware if your overspending. So now you know what’s coming in each week. So, on to what you can afford to spend.

Priorities.
Rent is possibly the first priory, and probably the biggest chunk of your outgoings, however fail to pay this, and landlords are down on you like a ton of bricks, and you could very quickly be evicted, plus finding it difficult to rent in future because of a bad credit history. So see this is paid, or set aside before you think about spending the rest!

Other necessities are food naturally, gas, water and electric, travel, clothes, ‘phone, council tax (if you’re not exempt, but some Boroughs are now making you pay a percentage now).

Do you know how much these come to? If not find out.  Most of the above are fairly regular expenses, and some have bills attached (always keep bills, sounds boring I know, but they are really useful to refer to). This should give you some idea of what these are on a weekly basis.

So taking away one from the other, and hopefully you’ve got some left over! This is what Economists call “discretionary funds” but feel free to call it what you want! Now, personally, I’ve lived on the breadline for periods in my life, and perhaps that’s made me a bit cautious, but however little it was, I’d tuck a bit away for any emergencies, and boy, do you have a lot of emergencies!!

What if it’s a minus amount? You’re spending more than you’re getting in. You’ll need to take a serious look at what you are spending.

Can you find ways of cutting back? Savvy shopping for food, kitting yourself out at charity shops (apart from socks and pants I rarely shop elsewhere!). Something I can borrow (not money though!), or share, shop with friends and take advantage of 3 for 2 offers, and buy larger (cheaper) packs and split them up. Learning to cook from scratch can save you a fortune, and sharing with friends (who’ll hopefully invite you round) can be fun.

Again, from experience, I thought I never could live on so little, but was amazed when I found I could, ducking and diving becomes a bit of an art, and like most things in life, the more you do it, the better you get at it!

Right, lets look at Borrowing!

OK, all these sayings like “neither a borrower or a lender be” or “borrow at your peril!” that the older generations have passed on to the younger generations for centuries, believe me, they are true!

It always seems crazy to me that those with money can borrow at less than 1% interest, yet those that at times, desperately need a loan, get charged north of 1000% (OK there are sound economic reasons, such as risk), but High Street “payday” lenders charge this, and more, and can make your life absolute hell if you miss a payment. Also beware of “easy payments” on tellys, furniture and the like, doesn’t sound like much per week, but you’re paying it off over years and years, and when you work out the total paid, and remember the sales price is often “top dollar” and loaded with extras such as insurance and breakdown cover you may have to take out, you’ll be appalled at the price, so “Do the Math” as they say!

Borrowing from friends and family can be a problem, I’m sure we all know at least one friendship or family that’s crashed from lending or borrowing, so really think it through if you are on either end of these transactions!

There are loans available from Councils at reasonable rates, they are harder to get than they used to be, but if you need to repair or replace the washing machine, they can be a godsend. Some charities offer similar, and sometimes small grants are available. Credit Unions can also offer reasonable rates, but require you to save with them for a bit before you can access these.

Finally- I know living day to day on a tight budget can be exhausting, so if you can spare the odd quid here and there, do treat yourself if and when you can, without going wild, it’s good for the soul!