Money Talks – Debt Management & Taking Control of Your Finances

People in the UK owed £1,741.7 billion in debt at the end of July 2021. The average UK adult is £30,575 in debt – and that’s without student loans.

They say ‘Money cant buy happiness’ …. yes but it can pay my bills!
Have you ever noticed that ONLY PEOPLE WHO HAVE MONEY… and are living comfortably with no money woes ever say that saying? You dont hear someone whos about to be evicted because they cant make their mortgage payments saying, ah well, money cant buy happiness. No! Because as lovely a sentiment as it is, and yet I understand the premise, money can buy a certain level of comfort in your life. Bills paid, food on the table and warm clothes in the winter.

I am however a firm believer that most of us are richer than we believe we are, if you have a roof over your head, food in the kitchen and family & friends who love and support you and you could go to if you were ever in need, you are so much richer than you think.

I am in debt!

And it is absolutely nothing to be ashamed of! In fact I am one of the whopping 63% of UK adults that has personal debt. So thats your mortgage, loans, car finance, student loans, credit cards and so on. Personal debt is debt owed for which you personally are legally responsible. Nowadays it is easier than EVER before to get into debt, with the ability to go online and get short term loans upto 1000s of pounds into your bank in 15 minutes! Plus more and more credit card companies, the rising cost of housing which is wildly unequal to rising wages. Its absolutely no wonder more and more of us are relying on credit and debts to live life.

BUT… What about when it gets too much?

Sometimes, debt gets on top of you. With interest payments or simply if you arnt great with money, your debt can get bigger than you can afford. When your monthly outgoings are more than youve got coming in for example, or you are paying as much as you can each month but still none of the debts are actually going down! You should absolutely never have to consider not paying your essential bills, eg the ones which will keep a roof over your head, hot water in your taps and food in the fridge.

I found myself in the situation some years ago where I let my debt get away from me. I was young(er) and naive to think I understood how all these lenders worked. I was taking out loans, to pay off loans. and this continued for a while until I got into a pit where, almost overnight, my outgoings were suddenly higher than my income! That was a BRICK to the face, let me tell ya… and boy did I need it. At this point payday loan companies werent regulated like they are now so it was so easy to get in a mess. I cant put all the blame on irresponsible money lenders though, of course I played my part. Being greedy and thinking I could manage it myself.

I can say Iv learnt from my mistakes now BUT I did NOT get out of the hole alone.

Debt Management

A Debt Management Plan is an agreement between you and your creditors to pay all of your debts. Debt management plans are usually used when either: you can only afford to pay creditors a small amount each month. you have debt problems but will be able to make repayments in a few months. Within a Debt Management plan, your debts will be consolidated into one and then paid out between your creditors. Alternatively, you can get a Debt Consolidation loan, so you can pay off all your debts with the lump and then pay back just that lump sum.

I am on a Debt Management plan with a company called DFH but there are so many awesome sites out there full of resources, advice and who can help set you up on a plan or with a consolidation loan. Ill list some of the best below;

• Debt Consolidation
• National Debt Relief
• Step Change

Its all about BUDGETING!

When you get paid at the beginning of the month, its like a fresh start. That is if, like ALOT of people with a monthly income, you live basically paycheck to paycheck.

If you have never heard of the saying paycheck to paycheck, basically it means that all your money comes in and goes right back out again by the end of the month. Or along those lines…

There are a MILLION tips and tricks you can find online on how to budget better, how to save money, etc etc. Im going to share some of my personal favourites, tried and tested that work for me (as someone who used to be terrible with money!) and also some other bloggers and resources which I know you’ll find really useful.

Budgeting

• Budget envelopes – The envelope system, also known as the envelope budgeting method, is a popular method for visualizing and maintaining a flexible budget. The key idea is to prioritize cash income to meet separate categories of household expenses in physically separate envelopes. You can do something similar with Monzo Pots – you can create a ‘Pot’ for each of your categories and split your money into those also.
• Physical piggy banks – The old school system! It works best if you get your hands on a piggy bank which you cant open unless you break it or smash it! I had one the last year which was a tin one, couldnt get into it unless i full on opened it with a tin opener. I only put £1 coins and higher in it and managed to save HUNDREDS!! Just from loose change I had in pockets and bags that I emptied when I got in.
• 50/20/30 – The basic rule is to divide up after-tax income and allocate it to spend: 50% on needs, 30% on wants, and socking away 20% to savings. This one is a really interesting concept which I enjoy but of course it requires your needs (bills) to be no more than 50% of your income, so it doesnt work for everyone!

Making Money & Saving Money resources…

• Neesha Rees
• Make Money Without a Job
• Money Saving Expert

I really hope this has even somewhat helped you today, if you have any questions about debt management plans or anything Iv discussed today, dont hesitate to get in touch or leave a comment. AND if you are struggling with debt, dont hesitate to contact the National Debtline or Step Change – both can offer advice and support!

Till next time xo

***Some links on this page may be Affiliate links or Sponsored links. This means I may earn a commission if you purchase through a link (at no extra cost to yourselves) or I may have been sponsored by a company or website to mention them. I am proud to recommend and promote only brands and companies that I believe in and any opinions expressed are entirely my own***