Financial support to people finding their finances difficult to manage
If you are struggling with your debts, then you may benefit from financial support.
Many organisations offer free financial support to people finding their finances difficult to manage. One example of this support is help with budgeting.
Budgeting is all about understanding and managing your finances – in other words, keeping control of your monthly income (the money you earn/receive) and expenditure (the money you spend/pay out).
Your total income should include everything you earn/receive: your salary, benefits, grants, etc. Your total expenditure should include your ‘priority’ debt repayments – for example, your mortgage/rent payments – and your day-to-day living expenses. You should not include payments to your ‘non-priority’ debts (credit cards, store cards, etc.) at this point.
Once you have noted down your total income and total expenditure, you should be able to work out your disposable income. This is done by simply subtracting your total expenditure from your total income. Your disposable income is the amount of money available for non-priority debt payments and, if there is any left over, for saving and non-essential spending.
Now that you have your disposable income, you should make a list of all your non-priority debt repayments (unsecured loans, credit cards, etc.) and ask yourself: Is it enough to cover all the repayments?
If it isn’t, then you really should consider seeking further financial support to help you address the problem. You may be advised to look into a professional debt solution.
Even if you do find that your disposable income is enough to cover the cost of servicing your debts, you may save yourself a lot of money in interest if you ‘overpay’ your monthly payments – in other words, make more than the required minimum monthly payment.
If you can do this, you’ll clear your debts faster – and that means you’ll pay less interest in the long run.
