Budgeting and dealing with debt
Budgeting is a really important skill. Our budget planner will help you work out exactly how much money you have coming and going every month. Knowing how much to set aside for all your outgoings will give you peace of mind and help you avoid getting into debt.
If you are struggling with debt, however, don’t panic! Here are four simple steps to help you prioritise and deal with debt:
Step 1: Work out your budget
- List all the money coming in and going out for your household
- Think about ways you might be able to increase your income, for example you may be entitled to certain benefits
- Try a budget calculator.
Step 2: Make a list of your debts
- Make a list of all the people or companies you owe money to, along with their contact details, any account numbers, the amount you owe and your most recent correspondence from them.
- Work out which creditors to deal with first, taking into account what will happen if you don’t pay them (e.g. your electricity could be cut off, etc).
Step 3: Sort out your priority debts
Priority debts need to be paid first. They include:
- Rent arrears: if you don’t pay you could lose your home.
- Gas and electricity arrears: if you don’t pay, you could be cut off.
- Council and Income Tax arrears, Court fines, maintenance payments and TV licence arrears: if you don’t pay these, bailiffs can take your belongings, you could be made bankrupt and, in some cases, be sent to prison.
Contact your priority creditors, explain your budget and try to make an arrangement to pay back what you owe. If you can’t afford to pay your priority creditors, contact us for debt advice as soon as you can on 020 3535 3535.
Step 4: Sort out your non-priority debts
Non-priority debts should come second. They include benefit overpayments and credit debts (e.g. overdrafts, loans, credit cards, catalogue debts, borrowed money).
If you have money left after setting up arrangements with your priority creditors, you can then negotiate repaying your non-priority creditors. You could also speak to a debt management company and ask them to make offers for you.
Here to help
Remember, we have a specialist team who can provide you with lots of information, advice and support so, if you’re concerned about money you owe and would like to talk to someone in confidence, please call us on 020 3535 3535 or email us today.