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2015 – A year to sort your finances?

calculatorAs the year continues to progress it is not uncommon for us to start to receive a number of calls from individuals who are in financial distress. With this in mind, it seems like a good time to provide some advice on how people may be able to help themselves. These include:

  1. Prepare a budget

Work out how much money is coming in and how much is going out. What is essential and what can you do without? It is important to be honest with yourself in order to get a true understanding of your own particular circumstances. Once the calculations are done you will hopefully be left with a surplus amount of money, and you can then plan what to do with that surplus.

  1. Review your bills

Look at everything you have to pay out and investigate if it is possible to get it for less. Can you get cheaper gas and electricity bills if you shop around, for example? Reduce your overheads as much as you can and cut out expenditure on services you no longer use, such as a gym membership.

  1. Identify sources of further income

If your analysis shows you need to generate further income then look into ways it can be achieved, such as a second job or renting out a room.

  1. Reduce your debt

The last few years have seen the lowest interest rates on record but credit card and loan rates have remained high so any spare cash should be used to reduce these debts as soon as possible. For example, instead of paying the minimum amount due, pay a fixed sum which you can afford. You may want to focus on the smallest card first as you will feel a sense of achievement once it has been paid off which will motivate you to continue. Alternatively, work on reducing the card with the highest APR. To be successful it is essential to have a plan and stick to it.

  1. Put some money to one side

We all have emergencies to deal with, it is a fact of life. To enable you to cope when issues arise consider putting some money to one side so you can deal with them or at least reduce the impact when they happen. Remember, even £40 per month becomes nearly £500 over the course of a year.

Hopefully the above points give you some guidance, but sometimes the problems are too great for you to work through alone. In these situations you may need to consider taking professional advice on your options whether it is a debt management plan, Individual Voluntary Arrangement or bankruptcy. Sadly, we see many people who try to forget the problem in the hope it will go away, but unfortunately it won’t!