A lot of this is out of your control, howvever there are some ways in which you can help yourself.
My blog this week is going to be about money management and most importantly becoming accountable for your finances so that you don’t get into debt or trouble.
The average credit card debt per household in the UK is £2230.00? (The Money Charity)
Unsecured debt can seem like a normal, sometimes necessary form of managing your monthly incomings and outgoings.
However, this is probably causing you more stress than you actually realise. Have you ever felt worried or scared at opening your statements?
Sometimes the stress isn’t intense so you may not always be aware of it, it is sometimes a background feeling that you can easily dismiss. The pressure on you will eventually reveal itself.
If we are living beyond our means it can feel like an insurmountable journey to getting back into the black. If we think about it as a ‘flow’ then the flow needs to change direction. This can be achieved….and funnily enough it may mean you spending just as much money as you already are.
This week I will be focusing on five steps to getting back to being in control of your income, expenditure and awareness of your financial reality.
The first step to solvency is becoming more aware of your finances, how much is coming in, how much is going out and how much is in there right now. This takes effort at first but if developed into a daily task will eventually form into a routine alongside all the other daily tasks you have, such as brushing your teeth. It needs to be taken as seriously as this because the quicker we can get a handle on the debting issue the quicker we can start being in the solution.
Your first action needs to be this:-
1. Stop debting.
Say to yourself that you will now live within your means which requires you to only spend what you earn. Unsecured debt is anything that you borrow which is not secured on an item. Personal loans, overdrafts, credit cards etc are all unsecured debts. Secured debts are car finance, mortgages and pawn shop loans.
If you find yourself needing money from this moment on think of other ways you could bring in some money. Sell something, do some part time work or maybe sell a service – think of things you are good at and offer those as a service to someone. Swap Shop - remember Noel Edmonds had a saturday morning tv programme where people would phone up with something they didn't want and they would try to swap it for something they did want. No money was involved.
A person may come and mow your lawn whilst you in turn might paint their shed. Think of ways you can stop the habit of borrowing above your means, make it a game or a challenge to bring some excitement to it.
2. Retain Clarity of your money
Write down in a little book your daily spending in as much accuracy as possible, mark down any income you received also. I carried a little black book with me and wrote it down whenever I purchased something. You can always keep receipts if you forget to bring it with you but make sure you complete the entries at the end of the day.
Include such things as:- Food - groceries and eating out, coffees, parking, gifts, include your direct debit - gym membership, household bills etc, make sure you note what it is that you're spending it on, for example - Sainsburys - Groceries £76 Toiletries (Personal care) £8.99, Kitchen cleaner (Household bills) £5.99, Black bin bags (Household bills) £2 and Tissues (Household bills) £3.50
Have you ever heard the magic rule of 21? Robin Sharma in his ground breaking self-help book ‘The monk who sold his Ferrari’ details this as one of his seven rules of goal setting/goal achieving. Set your daily income and outcome noting as a daily goal and continue this daily task for at least 21 days but ideally keep doing it everyday. The philosophy ensures that you will not only start seeing results (accountability, anxiety decreasing or some other positive mindset change) but you will also be used to undertaking the task and it has now become a part of your daily routine.
3. Spending Plan
Create a Spending Plan of everything you normally pay out. Include all the items that you write down over the 21 days – groceries, car expenses, rent/mortgage, entertaining, energy bills, personal care, phone, tv and appliance bills. A more detailed list can be found by clicking this link:-
https://localfirstbank.com/article/budgeting-101-personal-budget-categories/household bills; groceries; financial products like insurance, bank charges or interest; family and friends - this could include gifts, meals out or travel to events like weddings; travel and car costs such as fuel, road tax and maintenance and any public transport costs; leisure - including holidays, gym fees, meals out or other entertainment.
Example:-
The purpose of the spending plan is to ascertain what you will be paying out the following month. Using your record of spending and income this month you can complete an idea of the amounts for the following month ahead. You will also need to include items that you know are coming up for payment that aren't regular, MOT's or annual subscriptions for example. This will be an ongoing process and will not be perfect at the start, you will forget things or there may be items that you have swept under the carpet. Don't fret or beat yourself up, this is about progress and not perfection.
4. Retain Clarity of your debts.
Using four columns in a spreadsheet or word document; write a list of all the Creditors. (people/companies you owe money to) then list how much you owe each one. In the third column write the monthly payments you make. In the fourth and final column write the interest amount that you pay on top of the loan amount. For example 12.7%APR (this can be found on your statements or initial loan agreement confirmation).
5. If you are in debt - don't worry!
There is help out there for you and this doesn't need to be by way of an IVA or bankruptcy. A creditor can be negotiated with and there are also organisations out there who can offer support and advice.
Stepchange can help those who are on PAYE. https://www.stepchange.org/
Debtors Anonymous has a program for people who are in debt and offers help and support to those needing it. Members have come in with hundreds of thousands worth of debt and been able to pay it all off. https://debtorsanonymous.org.uk/
National debt line offer free advice and support via telephone and webchat. https://www.nationaldebtline.org/
There is a solution. Lots of people go into debt and it can cause overhwelm which can then lead to suicidal thoughts. If you are in this space please reach out and talk to one of the organisations above. It is not the end of the world and you are not a bad person. You are not your debt!
If you or someone you know is in need of help and support then please get in touch. I offer complete confidentiality and I will find a way to help you solve your problem. email martyn@becomeunstuck.co.uk.
コメント