When you're feeling the pinch...
This time of year can be hugely stressful for people, especially families with children that they want to please at Christmas and a big increase in parties and expenses. It can feel particularly hard with all the pressure of giving and if you are in debt already, you can often feel the pinch that little bit more and it's not pleasant.
Just a few years ago we were pretty swamped in debt. We had overdrafts to pay off every month, a couple of credit cards to sort out and spent half the month eagerly awaiting pay day after overspending when we finally had funds again, a pretty common pattern for many. We couldn't relax, I felt constantly stressed and although we are still a pretty low income family, we have managed to sort our finances, get out of debt and finally have money each and every week of the month - life is SO much easier.
I hear people talking about being skint and struggling all the time and I know just how it feels when you have bills waiting and it feels like you have so much more going out than coming in. I would say firstly to always be open and honest with people and never get yourself in more debt from buying gifts on credit cards or finance, that will cause you worry after the event.
I thought I'd pop a few tips together for anyone that may be in that there boat we were once in. With just a few simple changes for the new year, there can be much less stress all round, an easier life and maybe the start of seeing a dent in those debts.
1. Make a spreadsheet
Now this one may not be for everyone, but for me, seeing everything written down in black and white instantly makes things easier and is a great starting point. Note down every single payment going in and every single bill or payment going out. I like using a spreadsheet as it can work out all the sums for you and yes it does seem completely anal but it really does help matters seeing what you actually have going out. You may be surprised at how much or little you actually pay.
2. Get rid of any non essentials
Once you have a clear list of all your outgoings, go through it and seriously look at what you need. Cancel any TV packages for example or work out payment plans for any smaller debts. Really think about whether you need everything you are paying for, if you can live without it and live with the minimum you actually need, focusing instead merely on core bills such as utilities and debt payments.
As well as getting rid of things you don't need, also contact the companies for those more essential bills and have a chat. Ask if you can reduce your mobile tariff, make sure you are on the right plan with your utilities and well, all you can do is ask. You'll be surprised how much you could save just by making a few simple phone calls.
3. Work out your weekly spends
As well as your outgoings, have a list of any earnings and payments coming to you over the month. Each and every month, sit and work out your rough budget for each week and stick to it as best you can. It would be amazing to not have to look at our balances or worry about budgets, but most of us aren't lucky enough to be in the position where that is avoidable. Don't blow your wages in the first weekend (we've all done it!) leaving you short for the month, try and stick to your weekly spends and you'll soon notice things becoming a little easier despite the fact you may not actually have any more money, you are just better distributing it to last the month.
4. Consolidate your debts
This one is a real biggy for me and was the biggest life changer. Consolidating your debts means for example taking out a bigger loan to pay off all the smaller ones. You may not actually have any less to pay off, but having one single amount to cover each month feels like a huge weight has been lifted and is far more easier to manage, think about and budget for. If you have lots of little debts and payments to credit cards etc I'd really recommend this as a starting point to getting back on track.
5. Take out cash
This one is a biggy for me. I only learnt this recently but it does really help. Paying on card has always been easy but now with contactless technology it's easier than ever to spend away without thinking. One way that really seems to stop and make me think before spending is taking out the cash for the week and making it last. Knowing this physical money is all we have for that week makes me far less likely to make impulse purchases and I am much more careful with every single pound. I think having that visual aspect of seeing the money going down and knowing if we don't spend it all then there's more in the tin for next week means we put a lot more thought into where exactly our money is going.
For anyone out there that may be struggling, talk to people, get advice, sit down and write it all down and try not to worry. There are always ways to get sorted, lots of places offer payment plans and if we can get sorted I'm sure most people can too.
I think it's really important to think what the necessities are and living with no spare cash for a while except for food really made me put things in perspective. Live to your budget and remember kids don't need the world to love Christmas, they just need you - oh and maybe a few pigs in blankets too! See my top tips for a frugal Christmas here.