Times are hard at the moment and they’re even harder for young people, unemployment figures are rising, it’s getting harder to get on the property market and more and more young people are finding they have to move back in with their parents to make ends meet.
If you’re worried about your finances this article won’t fix it but it can help you get things back on track.
Stop Ignoring It
If your bank statements get stuffed at the back of a drawer the second they hit the door mat and the only way you know when you’ve reached your limit is when your card gets declined then you’ve got a problem. The first thing you need to do is take a big breath and tackle the problem head on. I’d recommend an evening when you have nothing on, online banking login details and as many of your past bank statements, credit card bills and store card bills you can get your hands on (oh and a glass of wine might help too).
You can’t start to fix a problem until you know for sure how bad it is. Make a list of everything you owe and write it down so you can see it in black and white. You might feel a bit shaky afterwards but you’ll feel so much better after the initial shock where’s off. You never know, it might not even be as bad as you thought it was.
Stay Away From Quick Fixes
So now you know exactly what the damage is you can work on fixing it, finances are like diets, there are no quick wins and no easy fixes. The last thing you should do is take out a pay day loan or any other high interest loan. These types of loans are extortionate and are actually illegal in most other first world countries. If you know what you’re doing it might be worth switching it all to a 0% interest credit card to stop you accruing any more interest on your existing debts but you should only do this if you can reasonably get the debt cleared before it starts changing you interest. In normal circumstances taking out more debt to clear the original debt isn’t advisable.
Talk
Make an appointment with your bank and sit down with them to go through everything. Most high street banks won’t charge you for this service (they know they can’t chase someone for money if they don’t have it in the first place). They can help you go through everything and come up with a sensible plan. If you don’t like talking to banks there are plenty of government and charity run advice places, they can help consolidate your debts sensibly and talk to the people you owe money to which will help relieve some of the pressure. There’s no shame in asking for help and it might be the smartest thing you ever do.
Start With The Biggest Expenses First
It might be tempting to start with the creditors who are making the most noise or the one that seems the easiest to pay off but you need to start with the most expensive debt and work at it. This will usually be store cards or credit cards as these have higher rates if interest than standard loans. It might seem daunting especially if you owe hundreds or even thousands on one card but the important thing is you start somewhere. Once you’ve made the decision to work on your debt you need to cut as much out of your life as possible, this means taking a pair of scissors to all those cards offering you money that isn’t yours.
Stick To A Budget
Now you know how much you owe and you know what needs paying back when, it’s time to look at the money you do have coming in. You’ve got yourself tangled up because your outgoings are higher than your incomings so you need to turn the balance. This is probably going to be the hardest part as it’s not something you can put to the back of your mind and it’s something you’re going to have to think about every day. This will impact the way you do your weekly shopping, how often you go out with friends and what you do for recreation. Work out how much money you have left after all essential bills, take away the money going to paying off your debt and break down what’s left between food and non-essential items that you ideally need (like mobile phones) and make sure you stick to it. If it helps take the cash from your account each week and leave all cards at home so you can’t be tempted.
Jessie works for businesselectricityprices.org.uk who are experts in helping businesses find the best supplier possible for their utilities