With Christmas and New Year over, it’s time to settle down to the harsh realities of January, especially if you’ve spent too much over the festive period.
Take a long look at your finances. Have you gone into debt over Christmas? If so, the most important thing you can do is to tackle it straight away, rather than pretending it’s not happening. Not taking a proactive approach could mean you’ll sink deeper into debt later in the year. The smart approach is to deal with it head on, as early as possible.
Here’s a quick guide to the steps you can take to get your finances back on track sooner rather than later.
Make a budget plan
The first step towards dealing with any post-Christmas debts is to complete a personal budget plan. A list of all your incomings and outgoings lets you see at a glance how much you can afford realistically to pay off your debts on a regular basis (but don’t try to pay them off too quickly by making repayments you can’t really afford, as it could lead to even more debts).
There are several online tools that could help. Try the personal budget planner within CABA’s money matters guide, the free budget planner at moneysavingexpert.com or the Debt Remedy tool at stepchange.org which also includes personalised advice on dealing with your debts. If spending too much at Christmas means you’ve missed essential payments in January, arrange to pay these off first. These will include your mortgage, rent, council tax or fuel bills – or any debts that could lead to you losing your home, your gas or electricity being disconnected, your belongings being taken by bailiffs or you going to prison. Once your priority debts have been settled, start paying back others such as overdrafts, bank loans and credit card bills (non-priority debts).
If you need more help, our CABA debt advisors are just a phone call – or a mouse click – away. Call our helpline on+44 (0) 1788 556 366 or chat to a money advisor online at any time of day or night.
For more information about how CABA can help you get your finances back on track, see Budgeting – a guide to getting started.
Cut monthly bills
If you can tighten your belt and spend a little less on your monthly bills, it could mean you’ll pay off your debts that much faster. Look at your outgoings on your personal budget plan and try to figure out how you could make some savings. You could, for instance, save money on fuel bills by switching to a cheaper energy supplier or reducing your energy usage - money matters has some tips on how to spend less on your energy bills. Find out how by visiting a comparison website such as moneysavingexpert.com, moneysupermarket.com, uSwitch.com, or simplyswitch.com.
There are lots of other ways to cut down on fuel bills. Just making sure you have adequate insulation in your home could mean you’ll pay less for heating (find out if you can get a grant or a loan for insulation at energysavingtrust.org.uk). Read our article Green ways to save cash for lots more ideas for saving money on fuel bills.
Spend less on food
There are also ways you could spend less money on food without compromising your diet. Cutting down on food waste is a good place to start, so only buy what you need, when you need it, and use leftovers instead of throwing them away. Shop around for the best prices on items such as fruit, vegetables, fish and meat by going to local and farmers’ markets, where food can often be cheaper than at the supermarket. Or if you have a garden – even if it’s just a tiny plot or a few pots on a patio – why not try growing some of your own fruit and veg in the spring
Read How to eat healthily on a budget for more ideas on how you can save on food bills.
Raise more income
You’ll also pay off your debts faster if you have more money coming in each month. Find out if there are ways of making some extra income by claiming benefits you’re entitled to by visiting turn2us.org.uk. Also read our Guide to benefits changes to find out how the recent welfare reform could affect you.
If you pay income tax, it’s also worth checking that you’re not paying too much or whether you’re entitled to any rebates you haven’t yet claimed.