Whether you are in debt, or just a little unsure of where your money position is, I’ve put together some of my top tips for dealing with debt and to get you into a money mindset. If you find yourself in debt or struggling with money, you may feel that you need to do something long term or get a third party such as a debt charity involved, but if you just need to do something quick and easy to make a difference whilst you get the ball rolling on that. Just remember that if you are in debt, it might be a long road to get out of it. You may need a lot of help and it may take a lot of time. It also might not take long at all and a quick look at your finances will help you identify what you need to do to sort out your situation.
- Check to see whether you may be entitled to any benefits. Some people really don’t want to go on them, but if you are entitled to them, why not apply? You can always cancel them or decline them once you are back on your feet. You can check whether you are eligible at the Gov UK Benefits Calculator.
- DO NOT take out a payday loan. Whilst they may seem like the answer to your problems, they have very high interest rates. This can more often than not cause your finances to spiral out of control and end up costing you more and doing more harm than good. It can also negatively affect your credit score if you cannot pay it back on time, as well as be incurring obscene amounts of interest and fees. Someone of them are known to practice some really awful debt recovery tactics too which is the last thing you need if you are already struggling with the stress of your financial position.
- Try and workout where you are with your finances. This may include putting together a budget. Money Advice Service have a great free tool. When I was in debt I went through a stage of not opening my post. You must open all your post and keep your paperwork! Not sure what your budget should look like or what any of the numbers might be, start by keeping a spending diary. Include everything – from your bills, to the sandwich you buy for lunch. Write it all down, on paper in a notebook or electronically in a spreadsheet – whatever works with you, but just make sure you stick to it.
- Go through your Direct Debits and Standing Orders – DO NOT cancel any of the essentials (such as mortgage, rent and utilities). You might spot something that you don’t need though. Can you downgrade a TV or phone package? Do you actually go to the gym enough to justify the spend? If you are not sure, talk it through with a trusted friend or relative. They will be able to look at it more subjectively.
- Contact your creditors. They are more able to help you if you speak to them early. The longer you leave it, the more interest and charges you may rack up. The majority of financial companies will have information online or on their bills about what to do if you are having trouble. They may be able to offer some sort of informal help or support, or be able to point you in the right direction.
The important thing to remember is not to do anything in the short term that can end up affecting you in the long term such as taking out a loan or credit card, or even skipping paying bills. These will all impact your credit score and possibly your finances going forward.
A bonus top tip, which is easier said than done, is to not let what anyone else says or thinks affect your position or decision! If someone is going to judge you because you are in debt, or applying for benefits, then they aren’t someone you need close to you in your life. It is easier said than done, but it really is an important point! Other’s peoples behaviour and attitudes have an underrated affect on mental health and it is well known that there is a strong link between debt and mental health.
Just remember that you aren’t the first person to ever have money worries, and you won’t be the last. It’s ok to ask for help and it’s ok to talk about it! If you feel like you need help but don’t feel ready to talk to someone you know, there are loads of debt charities and organisations who can give you FREE money advice including Christians Against Poverty and StepChange. No matter how bad your situation is, or how bad it may seem, there is no need to pay for financial help or advice. Don’t let unscrupulous people convince you otherwise or sell your financial products that claim to be the answer to all your prayers, because they won’t be, and realistically, if things really are that bad, them there won’t be an overnight solution.