- Are you struggling to pay your bills?
- Are you in arrears with rent or council tax?
- Do you have payday loans, catalogue debts or credit on cards?
If you are in debt and struggling with the repayments, you have the choice of fighting on or you can take action to tackle your situation. If you choose to take action, then there are five simple but powerful steps that can help you move forward.
1. Gather together all the information about your financial situation
Gather up all the letters and statements, the demands and bills and put them in order. That might mean for example separating your energy bills from your council tax bills and then putting each pile in date order. Don’t forget your bank statements! If you put the most recent on top of each pile, then you can see your current situation at a glance.
2. Write out a summary of your debts – who you own how much to and by when
Make a list of your ‘creditors’ or the people or organisations you owe money to. Next try to work out how much you owe them at the moment and if they have set any deadlines for repayment. This list of creditors is an important stepping stone to deciding on priorities.
3. Write out a summary of your income – where you get your money from, how much you get and how often
This is normally easier as many people depend on one or two sources of money – wages or salary, benefits, profit from the business, interest on savings. It’s useful to know what and when you have money coming in so you can be sure of having the money for living expenses as well as debts!
4. Keep a careful list of your spending for at least one full month – how much you spend on what and how often
Write down your expenditure soon after you have spent it. Use the receipts you get to remember the actual amounts. Lump together things like household goods but separate out things like gas or electricity, phone costs, travel and clothing. How you divide your costs will depend on your lifestyle and family but if you can’t record everything make a careful estimate.
5. Bring the information together in a personal budget – a list of your income, outgoings and debts
You can get hold of a budget sheet at How to work out your budget together with advice on what debts are most important. Once you have completed the budget sheet, you will know how much you can afford to pay your creditors. This is a critical figure because if it is too low you will not be able to pay off your debts in a reasonable time. Getting to this stage is a major piece of work but worthwhile as by this time, you have a clearer grasp on your financial situation and be in a position to take action.
If you need advice or help in tackling your debts – or just drawing up a budget sheet – take a look at the Citizens Advice website Adviceguide. Under Debt, you will find loads of useful hint and tips to get you through your debt problems. If you need to see someone about your debts or if a crisis happens around them, you can drop into the Southwark Citizens Advice Service at the Blue Market, Bermondsey on Tuesday and Thursdays 10:00-13:00 (or at Peckham High Street on Monday, Wednesday and Friday 10:00-13:00).