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Money, tax and benefits
Avoiding over-commitment
Bills are a fact of life; they only become a problem when you become overcommitted and your income can no longer meet the bills coming in. However, by careful budgeting and planning and by being realistic about what you can afford, you can avoid debt problems and make the most of your income.
Over-commitment
It is easy to become overcommitted; every time you sign up for a new service (for example, cable TV, gym membership, or a mobile phone contract), buy something on hire purchase or add to a credit card debt, you add to your monthly commitments.
Changes in circumstance
Another reason for over-commitment may be a change in personal circumstances that leads to a drop in income - for example, if you:
- lost your job
- had an accident that meant you had to stop work
- separated from your partner
Any of these events could cause a drop in income and mean that you have to change your spending priorities. If something unexpected does happen, it's important to review your budget as soon as you can.
Budgeting
A personal budget can help you to plan ahead and make the most of your money. You'll need to:
- identify your commitments (for example, mortgage, rent, bills)
- work out how much they cost
- work out where the money comes from to pay for them
It's important to review your budget regularly, because your circumstances are likely to change.
Priorities and plans
By working out a budget you'll know how much money you have for essential living expenses (for example, household bills, rent or mortgage and food) and how much you can afford to commit to other plans (for example, buying a car, taking out a mortgage, going on holiday or saving for the future).
By prioritising your commitments you can make sure your basic needs are met and then you can decide what else you can afford, and what you may have to save for or do without.
Get the most from your money
By shopping around and negotiating - not just for goods and services but also for financial products such as loans and credit cards - you can make your money go further.
What to do if you're over-committed
If you are over-committed and have a debt problem, don't ignore the situation.
Signs you may have a problem include:
- having rent or mortgage arrears
- taking out new loans to pay off old ones
- only paying the minimum amount on your credit card
- using a credit card for day-to-day purchases
- ignoring letters from creditors
By listing and prioritising your debts, budgeting and talking to your creditors you can get the situation in hand.
Where to get help and advice
National Debtline
National Debtline offers free, confidential and independent advice on how to deal with debt for people in England, Scotland and Wales. You can call their helpline or download free fact sheets from their website.
Consumer Credit Counselling Service (CCCS)
The CCCS offers a helpline, providing free and impartial advice to people with debt problems.
Citizens Advice Bureau (CAB)
Your local CAB will provide free information and advice on legal, money and other problems. You can find the address of your local office in the phone book or on their website.
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