Ugh. January. As if the misery that is post-Christmas isn’t bad enough, January also brings cold weather and bills. While we can’t stop the rain (or maybe snow…!) we can offer you some tips to help tackle those bills and start saving for a jolly 2020. Here’s how to get through the January blues.
Christmas is a great time for most people, but it can also be incredibly expensive. Sometimes we’ve found ways to make Christmas cheaper, and sometimes we just overspend. Unfortunately, when we overspend, the credit card statement at the end of the month can be a massive financial blow. Any utility bills we usually pay may now suffer and any other loan repayments suddenly seem impossible. However, there may be a couple of things you can do to tackle the costs at the end of the month.
It can be easy to become overwhelmed with statements and bills flying through the letter box, so it’s important to try and stay level-headed. Your non-discretionary expenditure should be your priority. This includes your rent or mortgage payments, utility bills such as electricity and water, and food. Priority expenditure is the stuff you cannot live without. Make sure your finances cover these payments before you start looking at any other services you need to repay.
Once you’ve set out your non-discretionary expenditure, take any credit card statements and loan repayments. Next, write a list of how much your monthly repayments to each is supposed be. You may need to make some personal cut backs to afford these payments. Either just this month, or maybe a couple of months going forward. But if this means you can repay your debts without putting yourself in further financial difficulty, then the luxuries might have to go on hold for a while.
If you add up your expenditure and it’s more than your income will cover, this is where we can break it down. Then start to consider different options.
Credit cards are great when you use them responsibly. Or if you have a 0% interest rate card. However, some of us aren’t so fortunate to benefit from this which means our credit card repayments can be particularly high. This is especially so after Christmas and birthdays.
If your credit card statement comes through and you’ve spent more than usual or your 0% interest rate term has ended, have a look around for another card. See if you can find another credit card with a 0% interest rate or even just a lower interest rate than your current card, and make sure it has the option of a ‘Balance Transfer’. A Balance Transfer credit card is pretty much just as it sounds; it means you can transfer the balance from one credit card to the next. This can help you save on interest and potentially reduce your payments each month. If you do get another credit card, make sure your cancel your old one so you’re not tempted to take out even more credit and further increase your debt.
If you’ve got a direct debit set up to repay a certain amount each month but it is now unaffordable, make sure you cancel the direct debit with enough time before the payment is due. You will still have to make at least your minimum payment, but this could help save a few quid when you need it most. It’s important that you don’t just make the minimum payment if you can afford to pay more going forward, as your borrowing will show on your credit file and making larger payments to settle the balance quicker usually works in your favour.
For other credit facilities such as bank loans or payday loans, it’s not possible to transfer the balance to another provider. If you’re struggling to repay a debt with a direct lender, you should get in touch with them as soon as possible and arrange a repayment plan. We can assure you that they want to help and by letting them know you circumstances you’ll have more time to set up a suitable plan.
Do a budget sheet and include all your priority debts as mentioned above. Then work out which monthly payments you can reduce, such as unnecessary clothing or nights out. This money should go towards your loans while you’re in a spot of financial difficulty.
Once you’ve drafted your budget sheet and worked out what your disposable income is (the difference between your income and expenditure), you can start to work out what you can afford to repay your creditor. If you have multiple creditors, you may want to work out the repayments on a pro-rata basis so that each creditor gets an amount that’s in proportion to your debt with them, or you may just want to split the amount evenly between all of them.
The important thing is that you make contact with your creditor and let them know your circumstances. Creditors will want to help you repay your loan, so they will arrange a repayment plan that you can afford. Although you may only be able to offer a token payment at this time, going forward you should look to repay your debt as quickly as possible.
Once you’ve adjusted your usual spending to allow for any extra bills after Christmas, you can start to look at saving for the year ahead. Maybe you want to save towards a holiday or you have an important anniversary coming up, or maybe you just want a little bit of extra cash ready for next Christmas: there’s a bunch of ways to save some money, even if you’re on a budget!
Although January may be a tough month, the rest of the year will hopefully be easier on your wallet. If you’ve already done a budget sheet, you should have an idea of what your disposable income is each month. Then, aim to put around 50% of this into another account or a savings account. If you think you may need access to this cash at any point throughout the year, then check that the account you’re saving money into is accessible – some accounts will lock away your savings for a period of time, usually 12 months.
If you have a tendency to overspend on your card without realising, it might be worth withdrawing the funds in cash and putting them in a piggy bank or jar that you know you won’t be tempted to dip into. Sometimes, seeing the funds literally grow can be all the motivation you need to continue to save. Or you can just transfer the money as soon as you get paid or after you’ve paid your bills, so then you can budget for the rest of the month with the remainder of your income.
Getting used to budgeting and saving helps you become more responsible and in control of your finances. If an emergency expense arises then you can feel comfortable that you’ve got the cash to cover it without applying for a loan or other credit facility.
However, if you haven’t got your savings in order yet, or maybe you only need a small amount of cash to pay an urgent bill and you don’t want to dip into your savings, a short term loan might be just what you’re looking for. You can borrow any amount that you need to the nearest pound, and you can choose your repayment dates to fit with your paydays. Although the APR (annual percentage rate) may seem high, your repayments might actually be smaller than you think.
Make sure you take into account all of your expenditure for the upcoming month and see if there’s any way you can reduce your spending to afford that unexpected bill before you consider applying for a loan, and it’s important to note that you shouldn’t use a payday loan to settle other debts.
But if you do need cash fast and you’ve considered your financial circumstances at the time of repayment, then moolr.co.uk might be able to help. Want to know more? You can find out if you’re eligible and apply on our website.