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Budgeting
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Whether you are in the process of deciding whether to take out a consolidation loan or looking for ways to prevent taking out a further loan, budgeting could help.
Having a budget that lists all your income and expenditure will help you to maintain control of your finances and, if necessary, help to illustrate the problems you may be having to your creditors.
- Keep a record of everything you spend money on to complete an accurate picture of your monthly expenditure.
- Make an estimate of your annual income and divide it by 12 to get a monthly figure
- Work out expenses that do not necessarily occur every month, such as insurance, holidays, car repairs, vet bills etc. Estimate how much you spend on these each year and then divide by 12 to determine your monthly cost.
- Complete a monthly budget. Add up all your monthly income and add up all your monthly expenditure
- Take the expenditure figure away from the income figure
- If the difference between your income and expenditure is a positive amount, you have a budget surplus and have money to pay towards your unsecured creditors.
- If, however, you have more expenditure than income, you have a budget deficit and will need to make changes to your spending habits to find money to pay your unsecured creditors.
- If you have a budget deficit you have two choices, reduce spending or maximise income
- To reduce spending consider, is this absolutely necessary? Can we reduce spending?
- To maximise income consider increasing earnings, checking your tax code is correct, or checking you are receiving all the welfare or tax benefits you are entitled to.
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
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